ARM vs Fixed Rate Mortgage Calculator

Compare 30-year fixed, 15-year fixed, 5/1 ARM, and 7/1 ARM side by side. See monthly payments over time with a chart showing when adjustable rates reset.

Loan Details
yrs
Interest Rates
Set rates for each loan type.
Best Option for 7-Year Stay
7/1 ARM

Lowest total cost over 7 years

$161,159

total payments over 7 years

Side-by-Side Comparison
30-Year Fixed
$2,076/mo initial
$174,343
over 7 yrs
15-Year Fixed
$2,700/mo initial
$226,829
over 7 yrs
5/1 ARM
$1,867/mo initial → $2,194/mo after
$164,693
over 7 yrs
7/1 ARM
$1,919/mo initial → $2,184/mo after
$161,159
over 7 yrs
Monthly Payment Over Time
Shows when ARM rates adjust.

How to Use This Calculator

Enter the loan amount and the rates for each mortgage type. The chart plots monthly payments over time so you can see exactly when ARM rates reset and how your payments would change.

  1. 1
    Enter the Loan Amount — The amount you plan to borrow. Default is $320,000 (80% of $400,000 home).
  2. 2
    Set Rates for Each Option — Adjust the rate for 30-year fixed, 15-year fixed, 5/1 ARM, and 7/1 ARM. ARMs typically offer lower initial rates.
  3. 3
    Estimate the Post-Fixed Rate — Set what you expect rates to look like when the ARM fixed period ends. Default is 7.5% — you can adjust based on your rate outlook.
  4. 4
    Set Your Planned Stay — How many years do you plan to stay in this home? This determines which option is most cost-effective for your specific timeline.

📊 Example: 5/1 ARM vs 30-Year Fixed at Today's Rates

You're borrowing $320,000. The 30-year fixed is 6.75%, 15-year fixed is 6.0%, 5/1 ARM is 5.75%, and 7/1 ARM is 6.0%. After the fixed period, rates rise to 7.5%. You plan to stay for 7 years.

Loan Amount$320,000
30-Year Fixed Monthly P&I$2,075/mo
15-Year Fixed Monthly P&I$2,700/mo
5/1 ARM (first 5 years)$1,868/mo
7/1 ARM (first 7 years)$1,918/mo
Best Option at 7 Years7/1 ARM saves $13,200 vs 30yr fixed

If you're certain you'll move or refinance within 7 years, the 7/1 ARM is the clear winner — lower payments during the fixed period and no risk of rate resets before you sell. But if plans change and you stay 10+ years, the 30-year fixed protects against future rate hikes.

Understanding Your Results

Each mortgage type has different risk and reward characteristics. Understanding them helps you choose the right fit:

30-Year FixedPredictable payments forever. The highest monthly payment among fixed-rate options, but the lowest risk. Best for buyers who plan to stay 10+ years and want payment certainty regardless of market rate changes.
15-Year FixedHigher monthly payment (~30% more than 30-year) but much lower total interest. A $320K loan at 6% for 15 years costs $166K in interest vs $408K for the 30-year at 6.5%. Best for buyers with strong cash flow who want to build equity fast.
5/1 ARMFixed rate for the first 5 years, then adjusts annually based on a market index plus a margin. The lowest initial rate but highest risk. Best for buyers who are certain they'll move or refinance within 5 years.
7/1 ARMFixed for 7 years before adjustments begin. A middle ground — lower rate than a 30-year fixed, with a longer runway than the 5/1 ARM. Best for buyers who expect to stay 5-10 years and want lower payments during that period.

Common Mistakes to Avoid

ARM and fixed-rate decisions are often misunderstood. Avoid these common mistakes:

❌ Choosing an ARM solely because of the lower initial rate without a clear exit plan.

✅ An ARM only makes sense if you have a concrete plan to sell or refinance before the fixed period ends. If you're not sure, choose the 30-year fixed. Rate shock when an ARM resets from 5.75% to 7.5% can add $400+/mo to your payment.

❌ Assuming rates will always drop, so an ARM will refinance easily.

✅ ARMs were a disaster for many borrowers in 2008-2009 when rates rose and home values fell simultaneously. If rates rise and your home value drops, you may not be able to refinance — leaving you stuck with resetting ARM payments.

❌ Not checking ARM caps and margin when comparing offers.

✅ ARM rates are calculated as (index + margin). The margin is fixed for the life of the loan (typically 2.25–3%). Also check periodic caps (how much the rate can increase per adjustment) and lifetime caps (maximum rate over loan life). A 2/2/5 cap is common — 2% first adjustment, 2% annual, 5% lifetime.

Related Tools & Guides

Compare your options further with these calculators and guides:

Mortgage Calculator →Refinance Calculator →ARM vs Fixed Guide →30 vs 15 Year Mortgage →

Frequently Asked Questions

What is the difference between ARM and fixed-rate mortgages?
A fixed-rate mortgage has the same interest rate for the entire loan term. An ARM (Adjustable-Rate Mortgage) has a fixed rate for an initial period (e.g., 5 or 7 years), then adjusts periodically based on market index rates plus a margin.
When does an ARM make sense?
An ARM makes sense if you plan to sell or refinance before the adjustable period begins. ARMs typically offer lower initial rates than fixed mortgages, which can save money in the short term. Common scenarios: first-time buyers planning to upgrade in 5-7 years.
What are the risks of an ARM?
The main risk is rate increases after the fixed period ends. If rates rise significantly, your monthly payment could increase substantially. Most ARMs have caps on how much the rate can increase per adjustment and over the life of the loan.
What is a 5/1 ARM vs 7/1 ARM?
A 5/1 ARM has a fixed rate for the first 5 years, then adjusts once per year (the "1" in 5/1). A 7/1 ARM is fixed for 7 years before annual adjustments begin. The 7/1 ARM offers a longer fixed period but typically has a slightly higher initial rate than a 5/1 ARM.