ARM vs Fixed Rate Calculator
Compare the total cost of an adjustable-rate mortgage versus a fixed-rate mortgage based on how long you plan to stay.
Total Cost by Hold Period
| Hold Period | Fixed Total | ARM Total | Difference | Winner |
|---|---|---|---|---|
| 3 years | $80K | $72K | $8K | ARM |
| 5 years | $133K | $119K | $13K | ARM |
| 7 years (selected) | $186K | $177K | $9K | ARM |
| 10 years | $265K | $263K | $3K | ARM |
| 15 years | $398K | $429K | $31K | Fixed |
| 20 years | $531K | $605K | $74K | Fixed |
| 25 years | $664K | $780K | $117K | Fixed |
| 30 years | $796K | $956K | $160K | Fixed |
ARM vs Fixed Rate: Which Is Better?
A fixed-rate mortgage locks in one interest rate for the entire loan term, typically 30 years. Your payment never changes, which makes budgeting simple and protects you from rising rates. The trade-off is that fixed rates are usually higher than the initial rate on an adjustable-rate mortgage.
An adjustable-rate mortgage (ARM) starts with a lower introductory rate for a fixed period — commonly 5, 7, or 10 years. After that initial period, the rate adjusts periodically (usually annually) based on a market index plus a margin. Rate caps limit how much the rate can increase per adjustment and over the life of the loan.
ARMs tend to save money when you plan to sell or refinance before the initial fixed period ends. If you know you will move in 5 years, a 5/1 ARM with a lower starting rate will almost certainly cost less than a 30-year fixed. The risk comes if your plans change and you end up staying longer — after the initial period, rate increases can push your payment well above what the fixed rate would have been.
Use this calculator to compare the total cost at your expected hold period. Pay attention to the breakeven year — that is the point where the ARM's rising rates make it more expensive than the fixed option. If your plans could extend beyond that year, the fixed rate offers more certainty. If you are confident about a shorter timeline, the ARM's lower initial payments put real money back in your pocket.