A two-step mortgage is a mortgage that come in two different types. The first type is a convertible two-step which converts the loan to a fixed rate loan after a specified number of years. The second type is a non-convertible two-step which converts the loan to an ARM loan. Usually these types of loans are called 5/25s or 7/23′s. The 5/25 is a thirty-year loan that has a fixed interest rate for the first five years of the loan and then adjusts into a convertible or nonconvertible loan as described above. The 7/23 is a similar 30 year loan that adjusts after seven years rather than five.