ARM vs Fixed Rate Calculator

Two schedules, run month by month

The calculator does not use a shortcut formula for the ARM side. It steps through the loan one month at a time for both loans and tracks the balance, the interest charged that month, and the cumulative amount paid on each. For the fixed loan, the rate you enter is applied for every one of the n months. For the ARM, the rate depends on where you are in the schedule.

Your ARM type sets the length of the initial fixed period: a 5-1 ARM holds its initial rate for 60 months, a 7-1 for 84, a 10-1 for 120 — the calculator reads the number before the dash and converts it to months. Every month at or before that mark uses your entered ARM initial rate. Every month after it uses a single second rate you supply, labeled the expected rate after adjustment, and that rate is then held flat for the rest of the loan.

The half of the comparison we can actually anchor

The fixed side of this comparison can be tied to a real, published number. The Freddie Mac Primary Mortgage Market Survey put the 30-year fixed average at 6.71% for the week ending September 3, 2026. On a $400,000 loan over 360 months, this calculator's amortization formula produces a monthly principal-and-interest payment of $2,584 and total interest of $530,156 over the full term — the same fixed-loan arithmetic used across every mortgage calculator on this site.

The ARM side of the same $400,000 loan cannot be filled in the same way. There is no published, verifiable ARM initial rate, no current SOFR or other index value, and no typical margin we can cite — ARM pricing is lender- and program-specific and moves independently of the fixed-rate survey above. What we can do honestly is show you the mechanics: enter your quoted ARM initial rate in place of 6.71% and the calculator applies the exact same monthly amortization formula, M = P·r(1+r)ⁿ / [(1+r)ⁿ−1], to produce your ARM's initial payment. Whatever that payment turns out to be, initialSavingsPerMonth is simply the fixed payment minus it.

This is the load-bearing point of this page: the tool is only as good as the two rates you put into it. A 5-1 ARM initial rate half a point below the fixed rate produces a very different comparison than one a point and a half below it, and neither of those spreads is something this page, or any page, can respond for you today.

How the post-adjustment payment is estimated

After the initial period ends, the calculator needs a remaining balance to compute the new payment on. Recomputing the exact amortized balance at that exact month is straightforward for the month-by-month simulation used for the break-even chart, but the single 'ARM adjusted payment' figure shown separately uses a shortcut: it assumes the balance remaining at adjustment is 85% of the original loan amount, regardless of your actual rate, term, or how much of the loan has really amortized by then.

That 85% figure is a fixed constant in the calculator, not a computed value specific to your loan. On a 30-year loan, the true remaining balance after a 5-year fixed period is usually higher than 85% of the original principal at a typical rate, because so little principal is repaid in the first five years of a long amortization. Read the standalone adjustedPayment figure as a rough approximation, and treat the month-by-month break-even simulation described below — which does track the real balance — as the more reliable of the two.

What 'break-even month' actually measures here

The break-even month is not the month your ARM payment exceeds your fixed payment. It is the first month in which your cumulative dollars paid on the fixed loan — the running sum of every fixed payment made so far — drops below your cumulative dollars paid on the ARM. Before that month the ARM has cost less in total; after it, the fixed loan has cost less in total, at least up to that point in the schedule.

Because the initial ARM rate is (in every sensible case) below the fixed rate, the ARM starts out ahead on this measure by definition. Whether it stays ahead depends entirely on the size of the jump at adjustment: a small jump can leave the ARM cheaper in cumulative terms for years past the adjustment date; a large one can erase the initial-period advantage within a year or two of the reset. Run the numbers with your own two rates rather than assuming the sign of the gap.

What to get from your lender before you trust either input

Because the calculator cannot supply the ARM inputs for you, the accuracy of everything downstream depends on getting two numbers right from your Loan Estimate: the ARM's actual initial rate, and a realistic, lender-disclosed picture of where the rate could go — not an optimistic guess for the 'expected rate after adjustment' field.

• ·Ask for the worst-case payment, not just the expected one. Your Loan Estimate is required to disclose the maximum payment possible under the note's caps. Run that figure through this calculator as a second 'expected rate after adjustment' scenario alongside your realistic guess, so you see both ends of the range this tool can show you.
• ·Confirm the adjustment frequency matches the type you selected. A 5-1, 7-1, or 10-1 designation should match the initial period your paperwork describes; this calculator trusts the label you pick to set the 60/84/120-month split.
• ·Larger loans often carry ARM pricing that fixed-rate averages don't reflect. The 2026 FHFA baseline conforming limit is $832,750 for a one-unit home, with a high-cost ceiling of $1,249,125 — loans above the applicable limit price as jumbo, and jumbo ARMs are common precisely because jumbo fixed rates often run higher than the conforming averages quoted above. If your loan is a jumbo, do not assume the 6.71% PMMS average applies to your fixed-rate side either.

What neither column includes

Both schedules here are principal and interest only — taxes, insurance, and HOA dues are identical on both loans and are not part of this comparison. One more thing to check before comparing total cost: if you itemize, IRS Publication 936 caps the mortgage interest deduction at the first $750,000 of acquisition debt ($375,000 married filing separately), with a $1,000,000 limit grandfathered for debt taken on before December 16, 2017. A large ARM balance that crosses that threshold generates non-deductible interest on the excess regardless of which schedule you choose, which changes the after-tax comparison in a way this calculator does not attempt.