How To Decide Between a Fixed and Adjustable Rate

Weighing the pros and cons of a fixed rate mortgage vs. adjustable rate mortgage (ARM) can be complicated. To compare these options, factor in the length of the loan, when and how often adjustments occur, which index the lender will use, plus any assumptions about future interest rates. This calculator will make the process simple and walk you thru running the numbers.

Loan Information
Total Costs

How long do you plan on staying?

Choose the length of time you expect to stay or when you might be ready to refinance.

Home Price

Choose the length of time you expect to stay or when you might be ready to refinance.

Down Payment

You can enter any number or percentage. Some programs allow down payments as low as 3%. Just remember, the more you put down, the less your payment will be.

CALCULATE

Fixed Rate Loan Info

Loan Term

Choose the length of the loan term you plan to use. Standard loan terms are 15 or 30 years.

Mortgage Rate

Enter the annual interest rate for a fixed rate mortgage.

CALCULATE

Adjustable Rate Loan Info

Loan Term

Choose the length of the loan term you plan to use. Standard loan terms are 15 or 30 years.

Mortgage Rate

Enter the initial annual interest rate for the adjustable rate mortgage.

First Rate Adjustment

Months

Enter the number of months (1-360) before the first rate adjustment is applied. For instance, 5 years would correspond to 60 months.

Rate Adjustment Interval

Months

Enter the number of months (1-480) between each subsequent rate adjustment. For instance, 1 year would correspond to 12 months.

Rates Prediction

Do you anticipate rates will increase, decrease or stay the same over the life of the loan?

Rate Adjustment Cap

The maximum amount the mortgage interest rate may increase with each adjustment.

Minimum Rate

The lowest interest rate that can be applied during the life of the loan.

Maximum Rate

The highest interest rate that can be applied during the life of the loan.

Margin

A fixed percentage rate that is added to the index value to determine the fully-indexed interest rate.

Index Rate

The benchmark interest rate that reflects current market conditions and is added to the fixed margin to calculate fully-indexed interest. The index rate is variable.

Index Rate Adjustment

How much the interest rate can adjust up or down from one adjustment period to the next.

Index Adjustment Interval

Months

Enter the number of months between index rate adjustments.

CALCULATE

These calculations are tools for learning more about the mortgage process and do not constitute an offer or approval of credit. Contact a PrimeLending home loan expert for actual estimates.

Fixed vs. Adjustable Costs

These are the total costs of the loans over the years you have specified.

Other calculators you might be interested in:

Fixed

$1,257

per month

Adjustable

$1,026 per month

Adjustable rate loan:

Fixed rate loan: