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

How to use this calculator

Enter loan amount.
Enter ARM intro rate/period and the adjusted rate you want to test.
Enter the fixed rate/term alternative.
Set how many years you expect to keep the mortgage (sell or refinance).
Review payments, totals, balances, and the difference vs a fixed-rate loan.

Inputs explained

ARM intro rate/period: The initial fixed rate and how long it lasts.
ARM adjusted rate: Your assumption for the first reset; include caps/index/margin if known.
ARM term: Full amortization length (often 30 years).
Fixed rate/term: Rate and term for the fixed mortgage alternative.
Holding years: How long you expect to keep the loan (sell/refi). Drives totals and balances.

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).

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.

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.
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.

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.

Related calculators

finance

Mortgage Payment Calculator

Estimate your monthly mortgage payment, total interest, and payoff schedule with one input-driven tool.

finance

Home Affordability Calculator

Estimate how much house you can afford based on income, debts, down payment, and estimated taxes/insurance.

finance

Refinance Breakeven Calculator

Compare your current mortgage to a refinance mid-term to see payment change, interest difference, and breakeven months on closing costs.

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.