ARM vs Fixed Rate Mortgage Comparison
Compare adjustable rate mortgage (ARM) versus fixed rate mortgage costs over different time periods
About this calculator
This ARM vs Fixed Rate Mortgage Comparison calculator helps you analyze and compare the total costs of adjustable rate mortgages (ARMs) versus fixed rate mortgages over various time periods. By evaluating factors like initial rates, rate adjustments, and payment changes, you can make an informed decision about which mortgage type better suits your financial situation and risk tolerance. The tool provides side-by-side cost projections to clearly show potential savings or additional expenses with each option.
How to use
Enter your loan amount, down payment, and credit score. Input the fixed rate mortgage terms and ARM details including initial rate, adjustment period, and rate caps. Select your comparison timeframe (5, 7, or 10 years) to see detailed cost breakdowns, monthly payment differences, and total interest paid for each mortgage type.
Frequently asked questions
When is an ARM better than a fixed rate mortgage?
ARMs are typically better when you plan to sell or refinance within the initial fixed period, or when interest rates are expected to remain stable or decline.
What are the main risks of choosing an ARM?
The primary risk is payment shock from rising interest rates after the initial period, potentially increasing your monthly payments significantly over time.
How do ARM rate caps protect borrowers?
Rate caps limit how much your interest rate can increase per adjustment period and over the loan's lifetime, providing some protection against dramatic payment increases.