ARM Or Fixed-Rate Calculator
Use this ARM or fixed-rate calculator to determine whether a fixed-rate mortgage or an adjustable rate mortgage (ARM), will be better for you when buying a home. The calculator also compares fully amortizing or interest-only ARMs.
To use the calculator, first enter the mortgage amount, term and rate in the boxes under “Fixed Rate Mortgage.” You can also move the little blue triangles along each dotted line. To fill in the same boxes for “Fully Amortizing ARM” and “Interest-only ARM,” click the “[+]” symbol in each category.
Under “Report Amortization,” you can click off “annually” or “monthly.” Then click “View Report,” and scroll down to see a results summary and a breakdown of how your payments and loan balance for all the loans change each month or year.
Our calculator lets you compare options side by side – and decide whether the certainty of a fixed rate or the savings of an ARM is the right choice for you.
Calculators provided by Bankrate.com
| Fixed Rate Mortgage: Press spacebar to hide inputs | Monthly payment $0.00 |
| Fully Amortizing ARM: Press spacebar to show inputs | Initial payment $0.00 |
| Interest only ARM: Press spacebar to show inputs | Initial payment $0.00 |
| Monthly Payment by Mortgage Type press spacebar to hide graph |
Definitions
- Fixed Rate Mortgage
- A fixed rate mortgage has the same interest rate and monthly payment throughout the term of the mortgage. The payment is calculated to payoff the mortgage balance at the end of the term. The most common terms are 15 years and 30 years.
- Fully Amortizing ARM
- This is the most common type of ARM. The monthly payment is calculated to payoff the entire mortgage balance at the end of the term. The term is typically 30 years. After any fixed interest rate period has passed, the interest rate and payment adjusts at the frequency specified. A Fully Amortizing ARM will also have a maximum rate that it will not exceed. Below is a list of the most common types of Fully Amortizing ARMs.
Common Adjustable Rate Mortgages ARM Type Months Fixed 10/1 ARM Fixed for 120 months, adjusts annually for the remaining term of the loan. 7/1 ARM Fixed for 84 months, adjusts annually for the remaining term of the loan. 5/1 ARM Fixed for 60 months, adjusts annually for the remaining term of the loan. 3/1 ARM Fixed for 36 months, adjusts annually for the remaining term of the loan. - Interest Only ARM
- An Interest Only ARM only requires monthly interest payments. Since you are not paying any principal, as you are with the other two types of mortgages described above, this can lower your monthly payment. However, since your mortgage's principal balance is not decreased, you will have a balloon payment at the end of the mortgage's term. Like a Fully Amortizing ARM, an Interest Only ARM will often have a period where the interest rate is fixed, and then it is adjusted annually. An Interest Only ARM will also have a maximum interest rate that it will not exceed. This calculator uses a maximum interest rate of 12%.
- Mortgage amount
- Expected balance for your mortgage.
- Term in years
- The number of years over which you will repay this mortgage. The most common mortgage terms are 15 years and 30 years. Please note that for the Interest Only ARM you will have a balloon payment for the entire principal balance at the end of the loan term.
- Expected rate change
- The annual adjustment you expect in your ARM. The range for this calculator is minus 3% to plus 3%. Use a negative value if you believe interest rates will decrease, a positive value if you believe they will increase.
- Interest rate
- Annual interest rate for each mortgage type. Typically an ARM will have a lower interest rate than a fixed rate mortgage. The rate of an Interest Only ARM will vary by lender.
- Months rate fixed
- This is the number of months the rate is fixed for an ARM. During this period the interest rate and the monthly payment will remain fixed. The rate will then adjust annually by the expected rate change.
- Interest rate cap
- This is the maximum interest rate for this mortgage. The mortgage's interest rate will never exceed the interest rate cap.
- Monthly payment
- Monthly principal and interest payment (PI) for the Fixed Rate Mortgage and the Fully Amortizing ARM. This is an interest only payment for an Interest Only ARM.