ARM vs Fixed Mortgage Calculator
Compare an adjustable-rate and a fixed mortgage, weighing the lower intro payment against the payment shock and extra interest at reset.
How it's calculated
An adjustable-rate mortgage, or ARM, starts with a low fixed rate for an intro period, often 5 or 7 years, then adjusts to a market rate. That gives you a lower payment early on, in exchange for the risk that rates rise when it resets. A fixed-rate loan keeps the same payment for the whole term, no surprises.
Take the default. A $400,000 loan over 30 years. The ARM starts at 5.5 percent, so the intro payment is $2,271 a month, versus $2,528 on a 6.5 percent fixed loan. Over the 5 year intro period that saves about $15,427. But if the ARM resets to 8 percent, the payment jumps to $2,855, a $583 monthly shock, and you pay about $82,443 more interest over the life of the loan than the fixed.
The ARM is a bet. It wins if you sell or refinance before the reset, or if rates fall. It hurts if you stay and rates rise. Match the intro period to how long you plan to keep the loan, and stress test the reset with a high adjusted rate here, since that is the real downside. If a higher payment later would break your budget, the certainty of a fixed rate is worth paying for.
Assumptions
- The ARM amortizes at the intro rate during the intro period, then the remaining balance is re-amortized at the adjusted rate for the rest of the term.
- Assumes a single reset to one adjusted rate. Real ARMs adjust in steps with rate caps, which this simplifies.
Last updated: 2026-08-08
These assumptions follow our general methodology.
Frequently asked questions
What is an adjustable-rate mortgage?
A loan with a low fixed rate for an intro period, commonly 5, 7, or 10 years, that then adjusts periodically to a market rate. A 5/1 ARM, for example, is fixed for 5 years then adjusts every year after.
Is an ARM a good idea?
It can be if you are confident you will sell or refinance before the reset, or if the intro savings matter more than the later risk. It is riskier if you plan to stay, since a higher rate at reset raises your payment, sometimes sharply.
What is payment shock?
The jump in your monthly payment when an ARM resets from its low intro rate to a higher market rate. This calculator shows the size of that jump so you can judge whether your budget could absorb it.
Should I choose a fixed or adjustable rate?
Fixed gives certainty for the whole term and suits people staying put. An ARM suits shorter stays or a strong view that rates will fall. Compare the intro savings against the payment shock and extra interest here, then weigh how long you will really keep the loan.