ARM vs Fixed Rate Mortgage Calculator
See the intro-period savings and the ceiling an adjustable loan can reach.
What This Calculator Does
Compares an adjustable-rate mortgage against a fixed-rate loan over the same term, showing the intro-period payment, the highest payment allowed at the first adjustment, and the worst-case payment the ARM's caps allow.
Who Is This For
Buyers offered an ARM at a lower introductory rate, owners who plan to sell or refinance before the first adjustment, and anyone who wants to know the ARM's ceiling before choosing it.
How It Works
Enter the loan amount, the ARM's intro rate and fixed period, its rate caps, and the fixed-rate quote to see both payment paths and the ARM's highest possible payment.
Frequently Asked Questions
What do ARM caps actually limit?
ARM disclosures typically include an initial cap limiting the first adjustment, a periodic cap limiting each later adjustment, and a lifetime cap setting the highest rate the loan can ever reach.
Should I qualify myself based on the intro rate?
It is generally more conservative to plan around the worst-case payment under the caps, since the intro rate is temporary by design and market rates at a later adjustment are outside your control.
When might an ARM make sense?
An ARM can fit a genuinely shorter time horizon, such as a planned relocation or resale, but a fixed-rate loan removes rate uncertainty for a longer or open-ended holding period.
What if I am unable to refinance before an adjustment?
The rate caps exist to bound that risk; since future refinancing depends on rates, credit, and appraised value at that time, it is prudent to evaluate the ARM assuming refinancing may not be available.