Secretary Martinez announced yesterday that HUD will expand its offerings of adjustable-rate mortgage products on FHA-insured mortgages, a move that will help add to the number of Americans who own homes.

According to terms of the proposal, potential homebuyers will be able to choose FHA-insured ARM mortgages with periods of three, five, seven or ten years, during which time the interest rate will be fixed.

Under the proposed rule, the interest rate for 3-year and 5-year ARMs cannot change by more than one percent per year after the fixed-payment period is over, with a maximum change of five percent for the life of the loan. For 7-year and 10-year ARMs, the maximums are two percent annually and six percent for the life of the loan.

The Secretary said that as many as 40,000 families a year are expected to choose the new adjustable-rate mortgages.

The proposed rule is the latest housing initiative by the Bush Administration, which has set a goal of increasing by at least 5.5 million the number of Americans who own homes in 2010.