Fixed vs. ARM Mortgage Calculator

Understanding ARM vs Fixed Mortgages

A ARM vs.  Fixed Mortgage Calculator compares the estimated monthly payment and potential savings of a fixed-rate mortgage with an adjustable-rate mortgage during the ARM’s initial fixed-rate period.

ARMs are available across conventional, jumbo, and Non-QM mortgages. Depending on the loan program, common options may include 5/1, 5/6, 7/1, 7/6, 10/1,  10/6 and other ARM terms. The first number generally represents how many years the initial rate remains fixed, while the second indicates how frequently the rate may adjust afterward.

A lower initial ARM rate can reduce the monthly principal and interest payment on mortgages of any size. The potential dollar savings become increasingly significant as the loan balance grows, making the comparison especially valuable for jumbo loans and larger Non-QM mortgages.

Use the calculator to:

• Compare a 30-year fixed mortgage with an adjustable-rate mortgage
• Estimate monthly principal and interest payments
• Calculate potential monthly savings from a lower initial ARM rate
• Estimate cumulative savings during the ARM’s initial fixed period
• Compare conventional, jumbo, and Non-QM mortgage scenarios
• See how loan size affects the dollar value of a rate difference
• Evaluate whether an ARM fits how long you expect to keep the mortgage

Calculator results are estimates. Actual fixed and ARM rates can vary by lender and depend on factors including credit, loan amount, down payment, property type, occupancy, reserves, income, assets, loan program, and market conditions.

What Is the Difference Between a Fixed-Rate Mortgage and an ARM?

A fixed-rate mortgage keeps the same interest rate throughout the loan term. With a 30-year fixed mortgage, the principal and interest payment remains consistent for 30 years unless the loan is refinanced or otherwise changed.

An adjustable-rate mortgage starts with an interest rate that remains fixed for an initial period. After that period, the rate may adjust according to the loan’s index, margin, adjustment schedule, and rate caps.

Common ARM Terms

5/1 ARM: Initial rate is fixed for five years and may generally adjust once per year afterward.

5/6 ARM: Initial rate is fixed for five years and may generally adjust every six months afterward.

7/1 ARM: Initial rate is fixed for seven years and may generally adjust annually afterward.

7/6 ARM: Initial rate is fixed for seven years and may generally adjust every six months afterward.

10-year ARM: The initial rate remains fixed for ten years before adjustments can begin, with the subsequent adjustment frequency depending on the specific loan.

These mortgages are commonly amortized over 30 years. A 5-year or 7-year ARM does not mean the mortgage has to be repaid within five or seven years.

How to Use the ARM vs. Fixed Mortgage Calculator

Enter your purchase price, down payment, fixed mortgage rate, ARM rate, and initial fixed period to compare the estimated payments.

The calculator shows the difference in principal and interest payments while the ARM rate remains fixed.

Home Price

Enter the purchase price of the property you are considering.

Your home price and down payment determine the estimated mortgage balance used in the comparison.

Down Payment

Enter your down payment as a dollar amount or percentage.

A larger down payment reduces the amount financed and therefore affects both the fixed-rate and ARM payment estimates.

Fixed Mortgage Rate

Enter the fixed mortgage rate you want to compare.

The actual fixed rate available to you may vary based on your qualifications, loan program, lender pricing, and market conditions.

Initial ARM Rate

Enter the initial ARM rate you want to compare with the fixed mortgage.

ARM pricing can vary significantly between lenders and loan programs. The rate available on a conventional ARM may also differ from the rate available on a jumbo or Non-QM ARM.

Initial Fixed Period

Select how many years the initial ARM rate will remain fixed.

For example, selecting five years can be used to evaluate a 5/1 or 5/6 ARM during its initial fixed period. Selecting seven years can be used to evaluate a 7/1 or 7/6 ARM.

The calculator focuses on the period when the ARM rate is known rather than attempting to predict future interest-rate adjustments.

What Does the ARM vs. Fixed Mortgage  Calculator Show?

The calculator estimates several figures that can help you evaluate the two financing options.

Monthly Fixed-Rate Payment

This is the estimated monthly principal and interest payment based on the fixed mortgage rate entered.

Monthly ARM Payment

This is the estimated monthly principal and interest payment during the ARM’s initial fixed-rate period.

Estimated Monthly Savings

When the ARM rate is lower, the calculator shows the estimated difference between the fixed-rate payment and ARM payment.

Estimated Savings During the Fixed Period

The calculator can also estimate the cumulative payment difference throughout the initial fixed period.

For a five-year ARM, that means comparing approximately five years of payments before the initial fixed period expires.

For a seven-year ARM, the comparison covers approximately seven years.

These savings are estimates based on the rates entered. Actual mortgage pricing may be different when you apply or lock your rate.

Fixed vs. ARM for Conventional Mortgages

Adjustable-rate mortgages are not limited to jumbo borrowers.

Conventional homebuyers may use a 5/1, 5/6, 7/1, 7/6, or another available ARM to potentially reduce their initial interest rate and monthly mortgage payment.

An ARM may be worth evaluating if you expect to:

• Sell the home before or near the end of the initial fixed period
• Refinance in several years
• Relocate
• Pay down a significant portion of the mortgage
• Prefer a lower initial payment

Whether an ARM actually offers better pricing depends on current market conditions and the lender. There are also times when the spread between fixed and ARM rates is relatively small.

The calculator helps you determine whether the available rate difference creates enough estimated savings to matter for your particular loan amount.

Why Loan Amount Matters When Comparing an ARM vs. Fixed Mortgage

A lower ARM rate can create savings on both conventional and jumbo mortgages, but the dollar impact of the rate difference generally becomes larger as the mortgage balance increases.

Consider two borrowers who are each comparing a fixed mortgage with an ARM that is 0.50% lower.

The borrower financing $400,000 may receive a meaningful reduction in the monthly payment.

A borrower financing $1.5 million at the same rate difference can see a substantially larger monthly and cumulative savings amount.

The rate advantage is the same. The amount of money affected by that rate is much larger.

That is one reason ARM comparisons become particularly important for higher-balance jumbo mortgages.

Why ARMs Are Especially Relevant for Jumbo Loans

Adjustable-rate mortgages are frequently considered by jumbo borrowers because larger mortgage balances magnify the impact of interest-rate differences.

For example, consider an estimated $1.2 million mortgage:

A 30-year fixed mortgage at 6.50% would have an estimated principal and interest payment of approximately $7,585 per month.

An ARM at an initial rate of 6.00% would have an estimated principal and interest payment of approximately $7,195 per month during the initial fixed period.

That represents approximately $390 per month in estimated payment savings, or more than $23,000 over five years, assuming the initial ARM rate remains fixed for that entire five-year period.

These rates are illustrative examples rather than current rate quotes. Actual rates can vary substantially based on the borrower, lender, loan program, property, and market conditions.

Increase the mortgage amount while keeping the same rate difference and the potential dollar savings increase as well.

Comparing Common ARM Terms With a Fixed Mortgage

5/1 and 5/6 ARM vs. Fixed Mortgage

Both a 5/1 ARM and 5/6 ARM generally provide an initial rate that remains fixed for five years.

The difference is what happens after that initial period.

A 5/1 ARM may generally adjust once each year after year five, while a 5/6 ARM may generally adjust every six months.

For purposes of comparing the first five years, however, both can be evaluated based on the initial fixed ARM rate.

A five-year ARM may be worth considering for conventional, jumbo, or Non-QM borrowers who expect to sell, refinance, relocate, receive future liquidity, or otherwise pay off a substantial portion of the mortgage before the initial fixed period ends.

7/1 and 7/6 ARM vs. Fixed Mortgage

A 7/1 or 7/6 ARM generally keeps the starting rate fixed for seven years.

A 7/1 may adjust annually after that period, while a 7/6 may adjust every six months.

The longer initial fixed period can appeal to borrowers who want more time before their rate becomes adjustable while still taking advantage of potentially lower initial ARM pricing.

For a conventional borrower, that may mean seven years of a lower initial payment.

10/1 and 10/6 ARM vs. Fixed Mortgage

A 10/1 or 10/6 ARM generally keeps the initial interest rate fixed for ten years before adjustments can begin.

A 10/1 ARM may generally adjust once per year after year ten, while a 10/6 ARM may generally adjust every six months.

A 10-year ARM can appeal to borrowers who want a longer period of payment certainty while still comparing potentially lower initial ARM pricing with a 30-year fixed mortgage.

For borrowers who expect to keep the mortgage for many years but may still sell, refinance, or pay down the loan before year ten, a 10/1 or 10/6 ARM can provide a longer fixed-rate window than five- or seven-year ARM options. On larger jumbo and Non-QM loan balances, even a relatively small rate difference over ten years can result in substantial estimated savings.

For a $1 million, $2 million, or larger jumbo borrower, seven years of even a modest rate advantage can translate into significant cumulative savings.

Why ARMs Are Common With Non-QM Mortgages

ARMs are also common within the Non-QM mortgage market.

Non-QM loans can provide alternative qualification options for borrowers whose finances do not fit traditional conventional underwriting, including self-employed borrowers, investors, and high-net-worth borrowers.

Depending on the loan program and lender, fixed and adjustable-rate options may be available for borrowers qualifying with:

• Bank statement income
• Eligible financial assets
• Business income
• Investment-property cash flow
• Complex or variable compensation
• Other alternative documentation

Because many Non-QM transactions also involve larger mortgage balances, comparing the fixed rate with available ARM pricing can reveal a significant difference in estimated monthly carrying costs.

ARMs and Jumbo Bank Statement Loans

Self-employed borrowers using jumbo bank statement loans may have access to fixed and adjustable-rate financing depending on the lender and program.

Bank statement loans can allow eligible borrowers to qualify using personal or business deposits rather than relying exclusively on taxable income reported on traditional tax returns.

For a self-employed borrower financing a larger home, even a modest ARM rate advantage can create meaningful estimated monthly savings.

The available fixed and ARM rates will depend on factors such as credit, loan-to-value ratio, loan amount, bank statement documentation, reserves, property, and lender guidelines.

ARMs and Jumbo Asset Depletion Loans

High-net-worth borrowers considering jumbo asset depletion loans may also want to compare fixed and adjustable-rate options.

Asset depletion mortgages can use eligible assets to calculate qualifying income, depending on the applicable loan program.

Because asset depletion borrowers frequently have significant liquidity and larger mortgage amounts, the expected length of time they plan to carry the mortgage may play an important role in the fixed-versus-ARM decision.

A lower ARM payment could reduce the estimated cost of financing during the initial fixed period while allowing the borrower to retain more capital elsewhere.

ARM vs. Fixed for Jumbo Cash-Out Refinancing

Fixed and adjustable-rate options may also be worth comparing when completing a jumbo cash-out refinance.

A cash-out refinance can result in a larger mortgage balance after equity is withdrawn. As the new balance increases, the dollar impact of a difference between fixed and ARM rates can become more significant.

Available ARM terms, loan-to-value limits, rates, and qualification requirements will vary by lender and borrower profile.

When Can an ARM Make Sense?

An ARM can be worth considering when the initial rate is sufficiently below comparable fixed-rate financing and the expected mortgage timeline aligns with the fixed period.

For example, a borrower who expects to sell a home in four years may place significant value on the initial pricing of a five-year ARM.

A borrower who expects to remain in the home longer may prefer a seven-year ARM or fixed-rate mortgage.

The size of the rate difference matters as well. If the ARM offers only a very small pricing advantage, the estimated savings may be limited. If the difference is more substantial, particularly on a larger mortgage balance, the cumulative savings can become much more meaningful.

When Can a Fixed-Rate Mortgage Make Sense?

A fixed-rate mortgage provides long-term interest-rate certainty.

It may be attractive when you expect to keep the mortgage well beyond an ARM’s initial fixed period, want predictable principal and interest payments, or receive fixed-rate pricing that is relatively close to the available ARM rate.

The Fixed vs. ARM Mortgage Calculator helps put that decision into dollars by showing approximately how much an ARM could save during its initial fixed period.

Compare Other Mortgage Calculators

The Fixed vs. ARM Mortgage Calculator focuses on the estimated payment difference between adjustable-rate and fixed-rate financing.

You can also explore LendFriend’s full collection of mortgage calculators to estimate monthly payments, home affordability, down payments, refinancing scenarios, and qualification under specialized mortgage programs.

Using multiple calculators can help conventional, jumbo, and Non-QM borrowers evaluate both mortgage qualification and the potential cost of different financing options.

Fixed vs. ARM Mortgage Calculator Results Are Estimates

The Fixed vs. ARM Mortgage Calculator is provided for educational and planning purposes. It does not represent a mortgage approval, commitment to lend, guaranteed interest rate, or final Loan Estimate.

The calculator compares estimated principal and interest payments during the ARM’s initial fixed-rate period. It does not predict the interest rate or mortgage payment after the ARM begins adjusting.

Rates entered into the calculator are illustrative unless based on an actual quote. Fixed and adjustable mortgage rates can vary by lender and based on the borrower’s qualifications, including credit profile, income, assets, reserves, loan amount, loan-to-value ratio, property type, occupancy, mortgage program, and market conditions.

Available ARM products and adjustment schedules may also vary. Depending on the lender and program, borrowers may encounter 5/1, 5/6, 7/1, 7/6, 10/1, 10/6, and other ARM options.

Property taxes, homeowners insurance, mortgage insurance, HOA dues, closing costs, discount points, lender credits, and other expenses are not included in the fixed-versus-ARM principal and interest comparison unless specifically shown by the calculator.

For a comparison based on your qualifications and current lender pricing, LendFriend Mortgage can review available conventional, jumbo, and Non-QM fixed and adjustable-rate mortgage options.