Mortgage Glossary
Two-Step Mortgage
Defined by Onias Derilus, Mortgage Capital · NMLS# 1859012 · Florida licensed mortgage broker
A two-step mortgage starts with a fixed rate for an initial period, then adjusts once to a new fixed rate for the remaining term.
What Two-Step Mortgage means
Unlike an ARM that resets repeatedly, a two-step adjusts only one time, often at year five or seven. The single change makes payments more predictable than a standard adjustable loan while still offering a lower starting rate than a 30-year fixed.
Florida example
A buyer expecting income growth chose a 5/25 two-step on a Gainesville home, locking a low rate for five years before the single rate adjustment for the remaining 25.
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