An adjustable-rate mortgage is a very specific type of variable rate mortgage where the interest rate is calculated by a relationship to the prime lending rate. An adjustable rate will be quoted as Prime plus or minus an amount to arrive at the rate the interest will be calculated. Example 1: Prime minus 0.90%, if prime is 6.95% the rate will be 6.95% – 0.90% = 6.05%; 6.05% is the rate that interest will be calculated on the loan. If the prime rate changes (6.95%) up or down, then the calculation rate will also change by the same amount. Example 2: Prime changes from 6.95% to 6.70% (-0.25%) then the interest rate in Example 1 will also drop from 6.05% down by the same -0.25% to 5.80%. An adjustable-rate interest rate mortgage term will have adjustable payments for the term, but the amortization will remain constant for the term of the loan.