The fixed rate mortgage vs. interest only ARM calculator will compare the monthly mortgage payments each type of loan. The fixed rate payment will be based on a fully amortized principal and interest payment, while the interest only payment will only be interest portion of the payment. You can also calculate how prepaying (paying down the principal balance) on an interest only mortgage will affect your monthly payment.

Fixed Rate vs. Interest Only Calculator Overview

A fixed rate mortgage has a fixed interest rate for the entire term of the mortgage. Typically, a fixed rate mortgage has a 15- or 30-year term. Payments for a fixed rate mortgage are amortized over the term of the mortgage so that principal and interest payments are made so that the mortgage is completely paid off at the end of the mortgage term.

Interest only ARMs are adjustable rate mortgages, which usually have a fixed rate for a certain period of the mortgage (usually 5, 7, or 10 years). During this fixed rate period only interest payments are required to be made. For example, a 5/1 interest only ARM has a fixed interest rate for the first 5 years of the mortgage and during the same 5-year period only interest payments are required.