Compare monthly payments, total interest, and scenario outcomes. See which mortgage type saves you more.
⚠️ Financial Disclaimer: This calculator provides estimates for educational purposes only and does not constitute financial or mortgage advice. Actual rates, payments, and costs vary by lender, credit score, and market conditions. Consult a licensed mortgage professional before making financing decisions.
Enter loan details: Input your loan amount and term (typically 30 years). This applies to both mortgage types.
Set the fixed rate: Enter the current fixed-rate mortgage offer from your lender. This stays constant for the entire term.
Configure ARM parameters: Enter the initial ARM rate, ARM type (3/1, 5/1, etc.), caps, and your best/worst-case future rate estimates.
Click Compare: The tool shows monthly payments, total interest for both types, and three ARM scenarios (best, average, worst).
Analyze the charts: The bar chart compares total interest costs. The rate projection shows how the ARM rate may change over the loan term in each scenario.
A fixed-rate mortgage keeps the same rate for the entire term — your payment never changes. An ARM has a lower initial rate for a set period (3, 5, 7, or 10 years), then adjusts annually based on an index plus margin. ARMs save money initially but carry rate increase risk.
Consider an ARM if you plan to sell/refinance before adjustments begin, expect rates to drop, the initial savings are significant, and you can afford higher payments if rates rise. Savings during the fixed period can be $100-300/month.
The fixed period before adjustments: 3/1 ARM = 3 years, 5/1 = 5 years, 7/1 = 7 years, 10/1 = 10 years. The 5/1 ARM is most popular, balancing savings and stability.
ARMs have caps. A typical 5/1 ARM: 2% per-adjustment cap, 5% first-adjustment cap, 5% lifetime cap. At 5.5% initial rate, the max lifetime rate would be 10.5%. Always check the cap structure.
The margin is a fixed percentage (typically 2-3%) added to the index rate after adjustments. It's set at loan origination and never changes. Lower margin = lower adjusted rate.
Most modern ARMs use SOFR (Secured Overnight Financing Rate), which replaced LIBOR in 2021. Your adjusted rate = SOFR + Margin. Understand which index your ARM uses.
Yes, anytime. Many ARM borrowers refinance before the initial period ends. Costs $2,000-$5,000. If rates dropped, lock in savings. If rates rose, you may face higher fixed rates.
A 15-year has lower rates (0.5-1% less) but higher payments. $400K at 6%: 30-year = $2,398/mo, $463K interest; 15-year at 5.5% = $3,270/mo, $189K interest. You save $275K in interest but pay $872 more monthly.