I prefer to think of a 5/1 ARM as a way to get into the market when one wouldn't ordinarily qualify. I would not plan on getting one without planning on making principal payments because you are dramatically increasing the amount you are spending due to interest. Regardless of what happens to the home value, if your salary is constant and you are making principal payments, you should be able to handle it, the question is whether you will be able to refinance given the new value of the home. Student loan debt is also important, you will want to make a plan to pay it off as soon as possible as some lenders will look at the amount of debt as a factor in giving a loan.