ARM vs Fixed Rate Calculator

Compare adjustable-rate and fixed-rate mortgages to find the best option for your situation.

Initial Savings
$263.01/mo

First 5 years

ARM Initial Rate
6.000%

vs 7.000% fixed

Breakeven
1y

Month 10

Rate Cap
11.000%

Maximum possible rate

Payment Comparison Over Time
How your monthly payment could change with an ARM
Fixed Rate Mortgage
Interest Rate7.000%
Monthly Payment$2,661.21
Total Interest$558,035.6
Total Cost$958,035.6
ARM (Expected Case)
Average Rate6.354%
Initial Payment$2,398.2
Total Interest$762,451.23
Total Cost$1,162,451.23

Understanding ARM vs Fixed Rate Mortgages

An Adjustable-Rate Mortgage (ARM) has an interest rate that changes periodically based on market conditions. A Fixed-Rate Mortgage maintains the same interest rate for the entire loan term.

How ARMs Work

  • Initial Fixed Period: ARMs start with a fixed rate for 3, 5, 7, or 10 years (e.g., 5/1 ARM = 5 years fixed)
  • Adjustment Period: After the fixed period, the rate adjusts annually or semi-annually
  • Rate Caps: Limits on how much the rate can increase per adjustment and over the life of the loan

When to Choose an ARM

ARMs can be beneficial if you:

  • Plan to sell or refinance before the fixed period ends
  • Expect your income to increase significantly
  • Believe interest rates will decrease
  • Want lower initial payments

Frequently Asked Questions