Loan Options
Year-by-Year Payment Comparison
How this ARM comparison works
This calculator compares a 30-year fixed-rate mortgage with an adjustable-rate mortgage using the rates and assumptions you enter. During the ARM's initial fixed period, the model uses the initial ARM rate. After that, it moves the modeled rate toward your entered “expected rate,” subject to the per-adjustment and lifetime caps you enter.
The expected future ARM rate is your scenario assumption, not a forecast. Real ARM adjustments depend on the loan's index, margin, adjustment schedule, and contractual caps. Review the Loan Estimate and ARM disclosures for the actual loan you are considering.
What the result means
The headline result identifies which modeled scenario has lower cumulative interest at the planning horizon you selected. It does not declare one loan type universally better. A fixed-rate mortgage provides payment-rate stability, while an ARM can change after its initial period and therefore carries different interest-rate risk.
Important ARM terms
- Index: a published benchmark used in the ARM rate calculation.
- Margin: an amount added to the index under the loan contract.
- Adjustment cap: limits how much the rate can change at an adjustment.
- Lifetime cap: limits how high the rate can rise over the life of the loan.