ARM vs. Fixed-Rate Mortgage Calculator
There are two main types of mortgages; adjustable-rate mortgages (ARMs) and fixed-rate mortgages. Adjustable-rate mortgages can provide attractive interest rates, but your monthly payment amount can vary throughout the entire term of the mortgage. Typically, an adjustable-rate mortgage offers an interest rate that is lower than a fixed-rate mortgage. Depending on how often the mortgage rate adjusts and in what direction (go up or go down), ARMs can cost a borrower more or less money in the long run compared to a fixed-rate mortgage.
Financial Calculators from
Press spacebar to hide inputs
Press spacebar to show inputs
Total Payments $447,272
Principal Balance by Year
press spacebar to show graph
Adjustable Rate Mortgage (ARM)
This calculator shows a fully amortizing ARM which is the most common type of ARM. The monthly payment is calculated to payoff the entire mortgage balance at the end of the term. The term is typically 30 years. After any fixed interest rate period has passed, the interest rate and payment adjusts at the frequency specified. A Fully Amortizing ARM will also have a maximum rate that it will not exceed. Below is a list of the most common types of Fully Amortizing ARMs.
|ARM Type||Months Fixed|
|10/1 ARM||Fixed for 120 months, adjusts annually for the remaining term of the loan.|
|7/1 ARM||Fixed for 84 months, adjusts annually for the remaining term of the loan.|
|5/1 ARM||Fixed for 60 months, adjusts annually for the remaining term of the loan.|
|3/1 ARM||Fixed for 36 months, adjusts annually for the remaining term of the loan.|
Original or expected balance for your mortgage.
Starting interest rate
Initial annual interest rate for this mortgage.
Term in years
The number of years over which you will repay this loan. The most common mortgage terms are 15 years and 30 years.
The current interest rate of the index used to calculate the interest rate on this Adjustable Rate mortgage. The current index rate plus the margin on that rate produces the Fully Indexed Rate that is used to calculate the APR for this mortgage.
The interest rate percentage above the index, or the 'margin', used to calculate the Fully Indexed Rate.
Starting monthly payment
Monthly principal and interest payment (PI) based on your beginning balance and starting interest rate.
Loan origination percent
The percent of your loan charged as a loan origination fee. For example, a 1% fee on a $120,000 loan would cost $1,200.
Total number of 'points' purchased to reduce your mortgage's interest rate. Each 'point' costs 1% of your loan amount. As long as the points paid are not a broker's commission, they are considered tax deductible in the year that they were paid.
Any other fees that should be included in the APR calculation. These fees can vary by lender, but at a minimum usually includes prepaid interest.
Annual Percentage Rate (APR)
A standard calculation used by lenders. It is designed to help borrowers compare different loan options. For example, a loan with a lower stated interest rate may be a bad value if its fees are too high. Likewise, a loan with a higher stated rate with very low fees could be an exceptional value. APR calculations incorporate these fees into a single rate. You can then compare loans with different fees, rates or different terms.
Interest rate cap
This is the highest interest rate allowed by your mortgage. Your actual interest rate will not be adjusted above this rate.
Months before first adjustment
This is the number of months that the interest rate is fixed. After this period, the interest rate will be subject to rate adjustments. If you enter zero in this field, we assume that the rate will begin making adjustments after initial period of time between adjustments has passed. If any number other than zero is entered, the first adjustment will take place at that time, and adjustments will happen at the frequency entered in the 'months between adjustments' field.
The amount you believe that your mortgage's interest rate will change. This amount will be added to or subtracted from your interest rate.
Months between adjustments
The number of payment periods between potential adjustments to your interest rate. The most common is 12 months, which means your payment could change at most once per year.
Total of all monthly payments over the full term of the mortgage. This total payment amount assumes that there are no prepayments of principal.
Total of all interest paid over the full term of the mortgage. This total interest amount assumes that there are no prepayments of principal.
Why use the ARM vs. Fixed-Rate Mortgage Calculator?
The ARM vs. Fixed-Rate Mortgage Calculator will compare the monthly mortgage payments for each type of loan. This calculator compares fixed-rate mortgage payments to both fully amortizing adjustable-rate mortgagesand interest-only adjustable-rate mortgages. Knowing exactly how much you stand to gain or lose depending on the different aspects of your mortgage loan can form a crucial part of your decision-making process, and that is how the ARM vs Fixed-Rate Mortgage Calculator can help you.
How to use The ARM vs. Fixed-Rate Mortgage Calculator
Not sure where to start? Let us help you:
- Enter the amount you intend to borrow in the field marked Mortgage amount
- Use the drop-down to select your mortgage term
- Input your interest rate
- Click the [ ] icon to expand the Fully Amortizing ARM options
- Enter your initial interest rate
- Specify the number of months your loan will be fixed at this rate – in cases with no fixed initial period, this will be 0
- Enter the amount by which you expect your mortgage rate to increase, as a percentage
- Input the maximum you think the interest rate will reach
- Repeat steps 4-8 for the Interest only ARM section (optional)
- Click View Report
Who is this Calculator for?
This calculator is most useful if you:
- Are trying to decide between an ARM, a fixed-rate mortgage, and an interest-only ARM
- Would like to weigh up the risks and benefits of getting an ARM as opposed to a fixed-rate mortgage
- Want to compare the total amount of interest you are likely to pay between an ARM and a fixed-rate mortgage.
Should I get an Adjustable-Rate Mortgage or a Fixed-Rate Mortgage?
Since ARMs typically have lower interest rates, it is important to consider how long you will be in the home or how long you will have the mortgage. You also need to consider your ability to deal with possible adjustments in your monthly mortgage payment. If you have the financial flexibility to handle a potential increase in your monthly payments, then it may well be worthwhile taking the lower rate offered by an ARM. After all, if interest rates decrease, so will your monthly payment. Additionally, you are typically able to borrow more on an ARM than you can on a Fixed-Rate Mortgage.
Fixed-rate mortgages have an interest rate that stays the same for the entire term of the mortgage loan. This therefore means that the monthly mortgage payments are fixed for as long as you have the loan – unless you enter into an agreement with your lender where you can pay more or less under particular circumstances.
The main benefit of this is that you are protected against fluctuations in the interest rate. Therefore, you can plan several years in advance safe in the knowledge that your monthly payments (which is likely to be your biggest regular outgoing) will not change. However, if mortgage rates go down over time, a fixed-rate loan will result in you paying more than you would have with an ARM.
Other Mortgage and Financial Calculators
In addition to the standard mortgage calculator, this page lets you access more than 100 other financial calculators covering a broad variety of situations. Choose from calculators covering various aspects of mortgages, auto loans, investments, student loans, taxes, retirement planning and more.
- Adjustable Rate Mortgage Calculator
- Interest Only ARM Calculator Overview
- How much can I borrow?
- Mortgage comparison: 15 years vs 30 years
- Balloon Loan Calculator
- ARM vs. Fixed-Rate Mortgage Calculator
- APR Calculator for Adjustable Rate Mortgages
- Bi-weekly Payment Calculator
- Blended Rate Mortgage Calculator
- Fixed Rate Mortgage vs. Interest Only ARM calculator
- Mortgage Tax Savings Calculator
- Rent vs. Buy Calculator
- Mortgage Payoff Calculator
- Mortgage Required Income Calculator
- Interest-Only Mortgage Calculator
- Mortgage Qualifying Calculator
- Mortgage Calculator Simple (PITI) - Mortgage Calculation
- Mortgage APR Calculator
- Bi-Weekly Payment Calculator For an Existing Mortgage
- Enhanced Loan Calculator
- Existing Loan Calculator
- Mortgage Debt Consolidation Calculator
- Mortgage Points Break-Even Calculator
- Refinance Break-Even Calculator
- Refinance Calculator
- Auto Rebate vs. Low Interest Financing
- Bi-weekly Payments for an Auto Loan Calculator
- Dealer Financing vs. Credit Union Financing Calculator
- Auto Lease vs. Auto Buy Calculator
- Home Equity vs. Auto Loan Calculator
- Auto Loan Calculator
- Bi-weekly Payments for an Auto Loan Calculator
- Auto Loan Payoff Calculator
- Retirement Income Calculator
- 401(k) Net Unrealized Appreciation Calculator
- 401(k) Savings Calculator
- 403(b) Savings Calculator
- 457 Savings Calculator
- 72(t) Distribution Impact Calculator
- Beneficiary Required Minimum Distributions
- Pension Plan Retirement Options
- Retirement Contribution Effects Calculator
- Retirement Planner
- Roth vs. Traditional IRA Calculator
- 72(t) Distribution Options Calculator
- Social Security Benefits Calculator