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ARM vs Fixed Rate Calculator
ARMs start with a lower rate but adjust after a fixed period. Whether that's better depends on how long you stay in the home. See the exact numbers for your situation.
Educational calculators — always consult a licensed professional before making financial decisions.
Home price minus down payment.
Current rate offered for a 30-year fixed mortgage.
The first number is fixed years; adjusts annually after.
Fixed for 5 years, then adjusts annually. Best if you plan to sell or refinance within 5 years.
The teaser rate for the fixed period. ARMs are typically 0.5–1.5% below 30-year fixed.
Conservative estimate: assume rates stay similar or rise 1–2% from today.
Total Interest Difference (30yr)
$30,304
Fixed wins
ARM vs. Fixed
The key question: How long will you stay?
If you'll sell or refinance within 5 years, the ARM almost certainly wins. If you'll stay longer, the answer depends on where rates go after adjustment.
ARM projections assume the expected adjusted rate for all periods after the initial fixed term. Actual rates vary. Consult a licensed mortgage professional.
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What you'll need
- ·Loan amount
- ·30-year fixed rate quote
- ·ARM type (5/1, 7/1, or 10/1)
- ·ARM initial rate
- ·Expected rate after adjustment
What you'll get
- ✓Monthly payment comparison — ARM vs fixed side by side
- ✓Initial monthly savings — How much ARM saves upfront
- ✓Break-even point — When fixed becomes cheaper
- ✓30-year interest comparison — Total cost at each scenario
How it works
Enter loan details
Input loan amount, fixed rate, ARM initial rate, and adjustment caps.
Set your time horizon
ARM loans favor short stays; fixed rates protect you over 7+ years.
Compare total cost
See breakeven point, worst-case ARM scenario, and total interest by year.
ARM vs Fixed Rate: $400,000 Loan
| Year | Fixed 7% Payment | 5/1 ARM (5% → 8%) | ARM Savings/Cost |
|---|---|---|---|
| Years 1–5 | $2,661 | $2,147 | +$514/mo savings |
| Year 6+ | $2,661 | $2,935 | −$274/mo more |
| 10-yr total | $319,320 | $308,400 | $10,920 ahead |
| 15-yr total | $478,980 | $494,460 | $15,480 behind |
ARM favors buyers who sell or refinance within 5–7 years.
State guides
How this varies by state
Property taxes, insurance costs, first-time buyer programs, and closing costs differ significantly across states. See local data for your state.
California
Texas
Florida
New York
Illinois
Pennsylvania
Ohio
Georgia
North Carolina
Michigan
New Jersey
Virginia
Washington
Arizona
Colorado
Tennessee
About this calculator
When is an ARM better than a fixed-rate mortgage?+
An ARM makes sense if you plan to sell or refinance before the fixed period ends. For a 5/1 ARM, if you're confident you'll move within 5 years, you capture the lower initial rate without exposure to adjustments. If rates also fall, the ARM could stay cheaper even after adjustment.
How much lower are ARM rates than fixed rates?+
ARMs typically start 0.5–1.5% below 30-year fixed rates. The exact spread depends on market conditions and the ARM type (5/1, 7/1, 10/1). Longer fixed periods (10/1) have smaller discounts than shorter ones (5/1) because lenders take on more rate risk.
What happens when an ARM adjusts?+
After the initial fixed period, the rate adjusts annually based on an index (usually SOFR) plus a margin. Most ARMs have caps: a periodic cap (how much the rate can change each year, typically 2%) and a lifetime cap (maximum change from the initial rate, typically 5–6%). Always ask your lender for the cap structure.
What is the break-even point between an ARM and fixed rate?+
The break-even point is the month when cumulative interest paid on the ARM equals what you'd have paid on the fixed-rate loan. Before that point the ARM is cheaper; after it the fixed rate wins. If you plan to move or refinance before the break-even, the ARM saves money regardless of what rates do after adjustment.
Should I be worried about ARM rate caps?+
Caps limit your worst-case scenario. A 2/2/5 cap structure means the rate can jump no more than 2% at first adjustment, 2% per year after that, and 5% total over the life of the loan. Always ask your lender for worst-case payment scenarios under the cap so you know you can still afford it.
Want to try different numbers?
Back to the calculator ↑ARM vs Fixed Rate Calculator is built and maintained by the RealCostIQ editorial team. Cost ranges and rates are checked against published industry data and contractor quotes, and revised when the underlying figures move. Read our data methodology or more about who builds this. Every calculation runs in your browser — no account, and none of your inputs are stored.
Cost ranges and rates here are checked against contractor quotes and published industry data. If a number still looks off, email Support@RealCostIQ.com and we'll review and fix it.