See the ARM's lower starting payment, and what it could become if the rate adjusts up.
A fixed-vs-ARM calculator compares a fixed-rate mortgage with an adjustable-rate mortgage, showing the ARM's lower starting payment and what that payment could become if the rate adjusts upward.
An adjustable-rate mortgage starts with a lower rate, and payment, than a comparable fixed loan, usually for an initial fixed period of five, seven, or ten years. After that the rate can move with the market, up to periodic and lifetime caps. You trade a lower cost now for uncertainty later.
An ARM can pay off if you're confident you'll sell or refinance before the rate adjusts, or if you can absorb a higher payment later. A fixed rate buys certainty, your payment never changes, which is valuable when you plan to stay put or when rates are expected to rise. The calculator shows the early savings against the risk if the rate hits its cap.
A fixed rate offers certainty; an ARM offers a lower initial payment with future risk. ARMs suit borrowers who'll move or refinance before the rate adjusts.
Up to the loan's periodic and lifetime caps. Enter the capped rate above to see the worst-case payment before choosing.
On a 5/1 or 7/1 ARM the first number is how many years your starting rate stays fixed, five or seven, and the second means it reprices once a year after that. This calculator holds the intro rate through the fixed window, then applies the adjustment you enter, while a fixed loan never changes.
See the exact formula and a worked example on our methodology page.