Which term defines a loan with an interest rate that can change over time?

An adjustable-rate mortgage, often abbreviated as ARM, is defined by its feature that allows the interest rate to fluctuate over time based on changes in a specific benchmark or index rate. This means that the borrower's monthly payments may increase or decrease as the interest rate changes, making it distinct from fixed-rate mortgages. A fixed-rate mortgage maintains the same interest rate throughout the life of the loan, resulting in consistent monthly payments, while an adjustable-rate mortgage can lead to varying payment amounts over time.

Sub-prime mortgages refer to loans typically offered to borrowers with lower credit scores and are riskier for lenders, but they do not inherently imply an adjustable rate. Conventional mortgages are standard loan products that do not fall under government-backed financing, and they can also be either fixed or adjustable. Therefore, the defining characteristic of a loan with an interest rate that can change over time is accurately described by the term "adjustable-rate mortgage."