ARM vs Fixed-Rate Mortgage Calculator
Compare an adjustable-rate mortgage with a fixed rate under flat, rising and falling rate paths, with rate caps, payment shock and the year the ARM costs more.
Enter the caps from the ARM's Loan Estimate, then pick a rate path. The ARM's payment resets once a year after the fixed period.
| Year | ARM rate | ARM payment | Fixed payment | ARM total paid | Fixed total paid |
|---|---|---|---|---|---|
| Year 1 | 5.75% | $2,334.29 | $2,528.27 | $28,011 | $30,339 |
| Year 2 | 5.75% | $2,334.29 | $2,528.27 | $56,023 | $60,679 |
| Year 3 | 5.75% | $2,334.29 | $2,528.27 | $84,034 | $91,018 |
| Year 4 | 5.75% | $2,334.29 | $2,528.27 | $112,046 | $121,357 |
| Year 5 | 5.75% | $2,334.29 | $2,528.27 | $140,057 | $151,696 |
| Year 6 | 6.75% | $2,563.62 | $2,528.27 | $170,821 | $182,036 |
| Year 7 | 7.75% | $2,796.16 | $2,528.27 | $204,375 | $212,375 |
| Year 8 | 8.75% | $3,030.91 | $2,528.27 | $240,746 | $242,714 |
| Year 9 | 9.75% | $3,266.97 | $2,528.27 | $279,950 | $273,053 |
| Year 10 | 10.75% | $3,503.53 | $2,528.27 | $321,992 | $303,393 |
| Year 11 | 10.75% | $3,503.53 | $2,528.27 | $364,034 | $333,732 |
| Year 12 | 10.75% | $3,503.53 | $2,528.27 | $406,076 | $364,071 |
| Year 30 | 10.75% | $3,503.53 | $2,528.27 | $1,162,838 | $910,178 |
This is a stress test, not a forecast: real ARM rates are the index plus a margin and can move differently from any path shown. Use the caps and margin from your own Loan Estimate. Ask whether the ARM can be refinanced or paid off before it adjusts.
How it works
The ARM keeps its starting rate for the fixed period. After that, the rate moves each year by your chosen step, limited by the first-adjustment cap, the later-adjustment cap and the lifetime cap. The payment resets from the remaining balance over the remaining term. The comparison adds payments to the remaining balance, so a lower early payment is not mistaken for a lower cost.
Understand the product in ARM vs fixed-rate mortgage. To compare a fixed-rate quote against other offers, use the rate comparison calculator.
Sources and further reading
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Frequently asked questions
What does a 5/6 ARM mean?
The rate is fixed for the first 5 years, then can adjust every 6 months. Many lenders now quote ARMs this way. This calculator adjusts once a year, which is a simplification; use your Loan Estimate for the real schedule.
What are ARM rate caps?
Limits on how far the rate can move: at the first adjustment, at each later adjustment, and over the life of the loan. The CFPB's ARM handbook explains how to read them.
When does an ARM make sense?
Typically when you expect to sell or refinance before the fixed period ends, or can afford the payment at the capped rate. It is riskier if you plan to stay and rates rise.
What are the index and margin?
After the fixed period, your rate is a market index plus a margin set by the lender, subject to the caps. The path in this calculator is a scenario, not a forecast.
Why does the ARM look cheaper in the early years?
ARMs usually start at a lower rate. The calculator shows both the early savings and the point where the ARM would cost more.
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Analyze a property with Reaixo →Educational Use Only: Reaixo is not a lender, mortgage broker, financial advisor, or loan originator. Calculations are estimates for informational and educational purposes only and may not include every cost associated with a mortgage. Rates, APRs, fees, taxes, insurance, mortgage insurance, eligibility, and loan terms vary by borrower, property, lender, loan program, and market conditions. Verify all figures and loan terms with a qualified lender and review your official Loan Estimate before making a financial decision.