Toll Brothers (TOL) is bringing back the adjustable-rate mortgage: The luxury builder said Friday it is offering a 7/1 ARM for 3.75%.

The deal for contracts signed on or after Saturday is available for loans under $417,000 - the majority of the company's buyers - in many communities nationwide.

The builder said it isn't worried about the bad reputation that ARMs have gotten, because this special rate will not quickly reset with crippling or unexpectedly high payments. After the seven-year rate lock, the loan's lifetime cap is 8.75%.

Given that many owners stay in a home for just a few years, "some buyers may choose not to pay that 30-year premium," said Don Salmon, chief executive of TBI Mortgage Co., Toll's mortgage subsidiary. "I think this is a viable product for many consumers."

Should the buyer desire a 30-year fixed-rate loan, that is 4 3/8%. A true jumbo loan could get a 7/1 ARM at 4.75%. The fixed-rate for loans above $417,000, but below $729,000 is 4.5%. There are no points for consumers.

The rates, which are among the lowest the company has offered, could be pulled at any time, it said.

The continued downturn has forced builders to get creative to move inventory. They've tried everything from free vacations to paid closing costs. In January, Toll stunned the industry with a fixed 3.99% rate for 30 years, a deal that ended several months ago.

It was successful, but many consumers instead chose a slightly higher rate that let them pick options, such as an upgraded kitchen, Salmon said.

-Dawn Wotapka, Dow Jones Newswires; 212-416-2193; dawn.wotapka@dowjones.com