What adjusted rate should I use?

Use index + margin plus caps if you know them, or a conservative guess to stress test.

Does this model future periodic adjustments?

It models the first reset only with one adjusted rate. Later resets and caps are not included.

Are taxes, insurance, or PMI included?

No, this focuses on principal and interest to compare the loans directly.

Can I model refinancing at reset?

Set holding years to when you plan to refinance to see costs before that point.

How do ARM caps affect this?

Enter an adjusted rate that reflects the cap you expect to hit; caps themselves are not modeled automatically.

finance calculator

ARM vs Fixed Mortgage Calculator

Compare an adjustable-rate mortgage’s intro/adjusted payments and total cost against a fixed-rate loan over the years you expect to keep the mortgage.

Results

ARM intro monthly payment (P&I): $2,271
ARM adjusted monthly payment: $2,614
ARM total paid over holding period: $199,005
ARM interest over holding period: $157,122
ARM remaining balance after holding period: $358,118
Fixed monthly payment (P&I): $2,528
Fixed total paid over holding period: $212,375
Fixed interest over holding period: $174,040
Fixed remaining balance after holding period: $361,665
Difference vs fixed (positive = ARM saves): $13,370
Interest difference (fixed − ARM): $16,918

Overview

Decide between an ARM and a fixed-rate mortgage by comparing intro vs adjusted payments, total paid, interest, and remaining balance over how long you expect to keep the loan. Adjustable-rate mortgages can offer a lower starting payment but carry rate risk after the intro period, while fixed-rate loans trade that uncertainty for predictable payments from day one.

This ARM vs fixed mortgage calculator brings both options onto the same timeline. You enter your loan amount, ARM intro and adjusted rates, fixed rate, terms, and how many years you expect to keep the loan. The tool then models payments, interest, and remaining balance for each option over that horizon so you can see, in dollars, whether the ARM’s upfront savings outweigh the risk of higher payments later.

How to use this calculator

Enter the loan amount you plan to borrow or the balance you are comparing for both loan options.
Enter the ARM intro rate and intro period in years, along with the adjusted rate you want to test and the full ARM term (often 30 years).
Enter the fixed-rate mortgage’s interest rate and term for your alternative loan.
Set how many years you expect to keep the mortgage before you sell the home, refinance, or pay it off early—this is your holding period.
Review ARM vs fixed intro payment, adjusted payment, total paid, interest paid, and remaining balance after the holding period, plus the savings numbers.
Experiment with different adjusted-rate assumptions and holding periods to see where the ARM stops being advantageous and a fixed rate becomes the safer or cheaper choice.

Inputs explained

ARM intro rate/period: The initial fixed interest rate on the ARM and how long it lasts before the first adjustment (for example, a 5/1 ARM has a 5-year intro period). During this time, your payment is based on this rate.
ARM adjusted rate: Your assumption for the rate after the intro period ends. You can use your index + margin plus any applicable caps if you know them, or plug in a conservative guess to stress-test how the ARM behaves if rates rise.
ARM term: The full amortization length of the ARM (often 30 years). Even though your intro rate is shorter, the loan is structured to pay off over this term under standard amortization.
Fixed rate/term: The interest rate and term for the fixed-rate mortgage alternative. This is your benchmark for comparing payment stability and total cost over your holding period.
Holding years: How long you expect to keep the loan before selling or refinancing. The calculator uses this horizon to total payments and interest and to compute remaining balances for both ARM and fixed scenarios.

How it works

Intro payment is calculated at the ARM intro rate over the full term. After the intro period, the remaining balance is re-amortized at the adjusted rate for the remaining months. Totals use your holding period.

Fixed payment is calculated for its rate/term. Totals and balances are modeled over the same holding period. Savings = Fixed total paid − ARM total paid (positive means the ARM cost less over the horizon).

We focus on the years you actually expect to own the home or keep the loan, not the full 30-year schedule. That means the comparison is tailored to your real-world sell or refinance timeline instead of an abstract full-term scenario.

Because ARMs can have multiple adjustments and complex caps, we simplify by letting you choose a single adjusted rate that represents your best guess or a conservative worst-case after the intro period. You can rerun the calculator with different adjusted rates to stress-test outcomes.

Formula

ARM intro payment = P × r_intro(1+r_intro)^n / [(1+r_intro)^n − 1]
After intro: Remaining balance re-amortized over remaining term at adjusted rate to get new payment
Totals = Sum of modeled payments over holding period
Savings = Fixed total paid − ARM total paid

When to use it

Testing whether an ARM saves money if you’ll sell or refinance before (or soon after) the first adjustment.
Estimating the payment jump after the intro period to stress-test your budget.
Comparing interest paid and remaining balance between ARM and fixed over your horizon.
Exploring different adjusted-rate scenarios to see when a fixed becomes cheaper.
Helping you decide whether a slightly lower ARM intro rate is worth the complexity if you are unsure how long you will stay in the home.
Checking whether a fixed rate makes more sense if you plan to hold the property long term, especially in a rising-rate environment.

Tips & cautions

Use a conservative adjusted rate—add cushion for caps and future rate moves.
If you might stay longer, extend the holding period to see the crossover point.
Remember taxes/insurance/PMI can make total payment differences feel smaller—this tool focuses on P&I.
If you plan to refinance at reset, set holding years to that timeline to see pre-refi cost.
Compare multiple adjusted-rate scenarios—for example, one where rates stay flat and another where they rise by the maximum allowed—to see both optimistic and conservative outcomes.
Do not forget to factor in closing costs and potential refinance costs outside of this calculator when deciding between an ARM strategy and a long-term fixed-rate loan.
Models one intro period and one adjusted rate; does not model multiple periodic resets or caps.
P&I only—excludes taxes, insurance, PMI, HOA, and closing costs/points.
Does not include ARM margins/index changes or refinance costs.
Assumes on-time payments and standard amortization; interest-only or neg-am ARMs not covered.

Worked examples

$400k loan, 5/1 ARM @ 5.5% → 7% after year 5, 30-year term, fixed @ 6.5%, holding 7 years

ARM intro payment ≈ $2,271; adjusted ≈ $2,614
7-year ARM total paid ≈ $199,005; fixed ≈ $212,375
Savings vs fixed ≈ $13,370
Balances after 7 years: ARM ≈ $358,118; fixed ≈ $361,665

$550k loan, 7/1 ARM @ 5.25% → 7.5% after year 7, 30-year term, fixed @ 6.75%, holding 10 years

ARM intro payment ≈ $3,037; adjusted ≈ $3,701
10-year ARM total paid ≈ $388,365; fixed ≈ $428,075
Savings vs fixed ≈ $39,710
Balances after 10 years: ARM ≈ $459,451; fixed ≈ $469,155

Deep dive

This ARM vs fixed mortgage calculator shows intro and adjusted ARM payments versus a fixed-rate loan, including totals, interest, balances, and savings over your holding period.

Use it to decide if an ARM is worth the risk or if a fixed rate is safer for how long you’ll keep the mortgage.

Adjust the holding period, intro term, and adjusted rate to see how sensitive your decision is to moving plans and potential future rate changes.

FAQs

What adjusted rate should I use?: Use index + margin plus caps if you know them, or a conservative guess to stress test.
Does this model future periodic adjustments?: It models the first reset only with one adjusted rate. Later resets and caps are not included.
Are taxes, insurance, or PMI included?: No, this focuses on principal and interest to compare the loans directly.
Can I model refinancing at reset?: Set holding years to when you plan to refinance to see costs before that point.
How do ARM caps affect this?: Enter an adjusted rate that reflects the cap you expect to hit; caps themselves are not modeled automatically.

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Estimates only. ARM adjustments, caps, margins, taxes, insurance, PMI, closing costs, and refinance outcomes vary. Confirm terms with your lender before relying on these figures.