ARM vs Fixed-Rate Mortgages
Understand the key differences between adjustable and fixed-rate mortgages.
GET PRE-APPROVEDQuick Comparison
ARM (Adjustable-Rate)
Variable interest rate
Lower Initial Rate
Typically 0.5-1% below fixed rates
Lower Initial Payments
Save money in early years
Rate Caps
Limits on rate increases
Rate Uncertainty
Payments can increase significantly
Budgeting Challenges
Harder to predict future costs
Fixed-Rate Mortgage
Stable interest rate
Payment Stability
Same payment for entire loan
Easy Budgeting
Predictable monthly costs
Rate Protection
Protected from rate increases
Higher Initial Rate
Starts higher than ARM
No Rate Decrease
Cannot benefit from falling rates
ARM vs Fixed-Rate Mortgages: Key Differences at a Glance
ARM (7/1)
Fixed-Rate (30-Year)
Frequently Asked Questions
What is an ARM loan?
An Adjustable-Rate Mortgage (ARM) has an interest rate that changes periodically based on market conditions. Most ARMs have a fixed rate for an initial period (e.g., 5, 7, or 10 years), then adjust annually.
When does an ARM make sense?
ARMs work well if you plan to sell or refinance before the rate adjusts, want lower initial payments, or expect your income to increase significantly.
How much can my ARM rate increase?
ARMs have rate caps that limit how much the rate can increase per adjustment period and over the life of the loan. Common caps are 2/2/5 (2% per adjustment, 5% lifetime).
Is a fixed-rate mortgage safer?
Fixed-rate mortgages provide payment stability and protection against rising rates, making them safer for long-term homeownership.
Need Help Deciding?
Our mortgage experts can help you choose the right loan type for your situation.
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