Compare monthly payments, interest costs, and total payments to find the best loan option.
Choosing the right mortgage is one of the biggest financial decisions you’ll make. Use this calculator to compare a fixed-rate loan to an adjustable-rate mortgage (ARM). Enter your loan details to see initial and projected payments, total interest, and a visual comparison over time—so you can decide with confidence.
ARM results follow your projected path (assumed rate increases and caps). Actual adjustments and caps vary by lender and index; this tool is for illustration only.
The fixed-rate side uses one APR for the full term. For the ARM, we model an initial fixed period followed by scheduled adjustments. At each adjustment, the payment is recast using the remaining term and the new rate. The projected path uses your “assumed annual increase†and respects the periodic and lifetime caps.
A fixed-rate mortgage keeps the same interest rate and principal-and-interest (P&I) payment for the entire term (e.g., 15 or 30 years). That payment stability makes budgeting easier and protects you from rising interest rates.
An ARM typically starts with a lower introductory rate for a set period (e.g., 5 years in a 5/1 ARM), then adjusts at a set frequency (e.g., annually). Future payments can go up or down based on the new rate, subject to periodic and lifetime caps.
ARM projections follow your assumed path and respect caps; actual future rates may differ. Taxes/insurance/HOA and PMI are simplified. This tool is for education only—not financial advice.
ARMs tie to an index (e.g., SOFR/Prime) plus a margin. After the fixed period, the rate can move at each adjustment—up to the periodic cap—and never above the lifetime cap. Our chart shows how your P&I could evolve.
Use the “Monthly Payment (P&I)†chart to see how the ARM’s payment may diverge from the fixed loan after the intro period. The comparison bars summarize initial all-in payment, projected maximum all-in, total interest, and total payments.
The break-even occurs when cumulative ARM savings from its lower intro rate are offset by higher payments later. Test different ARM paths (higher/lower assumed increases) to see where that point might land for you.
If a 5/1 ARM starts 1% lower than a fixed rate, you may save materially in the first 5 years. If rates rise sharply, future ARM payments could exceed the fixed loan—shorter horizons often favor ARMs, while long horizons favor fixed.
The first number is the fixed period in years; the second is the adjustment frequency—“/1†= annual, “/6†= every 6 months. A 5/1 ARM is fixed for 5 years, then adjusts yearly.
Periodic cap limits change at each adjustment (e.g., +2.0 pts max), and the lifetime cap limits the maximum APR over the loan’s life (e.g., 5 pts above start).
New ARM rate = index (benchmark) + margin (lender add-on), both defined in your note. Our tool approximates a projected path—you can tune it via “Assumed annual increase†and the caps.
Rates change daily with inflation data, Fed policy, and market expectations. Compare quotes from multiple lenders on the same day and consider a rate-lock if timing is critical.
If you chose an ARM and rates fall or your plans change, refinancing to a fixed loan can stabilize payments. If you’re on a fixed loan and rates drop, a refi could reduce your payment or term.
Try our Mortgage Payment Calculator or our 15-Year Mortgage Calculator for more scenarios.
Some lenders offer ARM-to-fixed conversion options; otherwise, a standard refinance can switch you to a fixed term.
DTI compares your monthly debt payments to your gross monthly income. Lower DTI improves approval odds and pricing.
Conventional loans usually require PMI if your down payment is under 20%. It can drop off once your LTV reaches ~80%.
Consider your after-tax budget, emergency cushion, and future plans—not just what a lender will approve.
Run a few scenarios, then compare quotes from multiple lenders on the same day. If you need predictable payments, a fixed loan can simplify planning. If you expect to move or refinance within a few years, an ARM’s lower intro rate could make sense.
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