How to compare a fixed-rate mortgage and an ARM
Choosing between a fixed-rate mortgage and an adjustable-rate mortgage comes down to what you think rates will do and how much payment change you can absorb. This calculator amortizes both loans on the same amount and term, then compares the monthly payment and the total interest paid to payoff.
An ARM keeps its start rate through the initial fixed period, then adjusts on the schedule you choose. The rate added at each adjustment works like a periodic cap, and the lifetime cap is the highest rate the loan can ever reach. At each adjustment the payment is recomputed from the remaining balance and remaining term.
Because the ARM payment moves, the calculator shows both the first payment and the final payment. Qualifying on the first payment alone is risky; checking the payment at the lifetime cap shows the worst case your budget would have to absorb.
Results are an estimate for the scenario you entered, not a quote, and figures reflect 2026 market conventions. Points, private mortgage insurance, escrow for taxes and insurance, and index behavior are not included, so compare the loan estimates your lender provides before deciding.
Frequently Asked Questions
The first number is the years the start rate is fixed, and the second is how often the rate adjusts afterward. Enter 5 as the initial fixed period and choose the 12-month adjustment frequency for a 5/1 ARM.
Your loan estimate and note list them, often written as 2/2/5 or 5/2/5. Put the per-adjustment cap in the rate added at each adjustment and the start rate plus the lifetime cap in the lifetime cap field.
At each adjustment the payment is recalculated from the remaining balance and the remaining term, so a higher rate raises the payment for the rest of the loan. The worst case is the payment at the lifetime cap.