Fixed vs Adjustable Rate Mortgage: Compare Payments

What does the ARM winning by $2,975.75 mean?

It means that over the first 10 years, the ARM costs $2,975.75 less in interest than the fixed loan — $239,521.41 against $242,497.16 — because five years at 5.50% saves more than five years at 7.50% costs. The ARM pays $2,271.16 a month for the first five years, then $2,733.10 a month after the adjustment, against the fixed loan's $2,528.27 a month throughout. The ARM also pays $3,137.12 less in total over the 10 years, but it owes $161.37 more at the end of them — $339,265.88 against $339,104.51 — because the fixed loan repays principal faster while the ARM is at its low rate. The winner is decided by interest, not by total paid, because the two loans repay different amounts of principal.

Three things to check before you trust the number

The horizon decides the winner. Over 10 years the ARM wins by $2,975.75 of interest, but over the full 30 years the fixed loan wins by $46,022.25 — the adjusted rate keeps charging for 20 more years after the horizon ends. If you will sell or refinance within the fixed period, the ARM's low start is nearly free money; if you will stay for the full term, the fixed loan's certainty is worth more.

The adjustment is on the remaining balance, not the original loan. After 5 years at 5.50% the balance is $369,842.41, and the adjusted payment of $2,733.10 is that balance re-amortized at 7.50% over the remaining 25 years. A bigger balance at the adjustment means a bigger second payment — and a shorter fixed period leaves a bigger balance behind.

Interest, not paid, is the fair comparison. The fixed loan pays $303,392.65 over 10 years and the ARM $300,255.53 — a gap of $3,137.12 — but $161.37 of that gap is principal the fixed loan repaid and the ARM still owes. The interest gap of $2,975.75 is the true saving, and it is the number the winner is decided on.

Worked example

On the defaults: $400,000, fixed 6.50% over 30 years against an ARM at 5.50% for 5 years then 7.50%, over a 10-year horizon.

1. Fixed payment: $400,000 at 6.50% over 360 months is $2,528.27 a month.
2. ARM first payment: $400,000 at 5.50% over 360 months is $2,271.16 a month.
3. Balance at the adjustment: after 60 months at 5.50% the balance is $369,842.41.
4. ARM second payment: $369,842.41 at 7.50% over the remaining 300 months is $2,733.10 a month.
5. Interest over 10 years: fixed $242,497.16, ARM $239,521.41 — the ARM wins by $2,975.75.
6. Largest adjusted rate for the ARM to still win: 7.50% — at 7.50% the ARM wins by $2,975.75 (unrounded 2975.751004), and at 7.75% the fixed loan wins by $1,664.06 (unrounded 1664.057973).
7. Smallest fixed period for the ARM to still win: 5 years — at 5 years the ARM wins by $2,975.75 (unrounded 2975.751004), and at 4 years the fixed loan wins by $5,216.44 (unrounded 5216.439573).

Every branch, checked

• horizon 5 years: horizon 5 years: Fixed $2,528.27/mo; ARM $2,271.16/mo then $2,733.10/mo; ARM wins by $20,028.46 interest over 5 years. horizon 5 years — the ARM wins by $20,028.46 of interest, the whole horizon sits inside the fixed period, so the ARM never adjusts.
• horizon 30 years: horizon 30 years: Fixed $2,528.27/mo; ARM $2,271.16/mo then $2,733.10/mo; Fixed wins by $46,022.25 interest over 30 years. horizon 30 years — the fixed loan wins by $46,022.25, over the full term the adjusted rate costs more than the low start saves.
• adjusted rate 6.50%: adjusted rate 6.50%: Fixed $2,528.27/mo; ARM $2,271.16/mo then $2,497.20/mo; ARM wins by $21,458.36 interest over 10 years. adjusted rate 6.50% — the ARM wins by $21,458.36, a gentle adjustment keeps the ARM ahead.
• ARM initial rate 6.50%: ARM initial rate 6.50%: Fixed $2,528.27/mo; ARM $2,528.27/mo then $2,767.11/mo; Fixed wins by $18,712.56 interest over 10 years. ARM initial rate 6.50% — the fixed loan wins by $18,712.56, with no low start the ARM has nothing to save.
• fixed rate 5.50%: fixed rate 5.50%: Fixed $2,271.16/mo; ARM $2,271.16/mo then $2,733.10/mo; Fixed wins by $36,818.72 interest over 10 years. fixed rate 5.50% — the fixed loan wins by $36,818.72, a fixed rate as low as the ARM's start beats the ARM outright.
• fixed period 10 years: fixed period 10 years: Fixed $2,528.27/mo; ARM $2,271.16/mo then $2,659.78/mo; ARM wins by $39,794.47 interest over 10 years. fixed period 10 years — the ARM wins by $39,794.47, ten years at the low rate before any adjustment.
• fixed period 1 year: fixed period 1 year: Fixed $2,528.27/mo; ARM $2,271.16/mo then $2,784.85/mo; Fixed wins by $31,210.72 interest over 10 years. fixed period 1 year — the fixed loan wins by $31,210.72, one year at the low rate is not enough.
• loan $300,000: loan $300,000: Fixed $1,896.20/mo; ARM $1,703.37/mo then $2,049.83/mo; ARM wins by $2,231.81 interest over 10 years. loan $300,000 — the ARM wins by $2,231.81, the same shape at a smaller size.
• term 15 years: term 15 years: Fixed $3,484.43/mo; ARM $3,268.33/mo then $3,574.77/mo; ARM wins by $7,229.37 interest over 10 years. term 15 years — the ARM wins by $7,229.37, a shorter term means less time at the adjusted rate.
• fractional inputs: fractional inputs: Fixed $2,541.44/mo; ARM $2,283.72/mo then $2,746.96/mo; ARM wins by $2,965.77 interest over 10 years. fractional inputs — loan $400,000.50 at 6.55% / 5.55% / 7.55%, the ARM wins by $2,965.77, the same shape to the cent.

The reverses, worked backwards

• Largest adjusted rate for the ARM interest to stay no more than the fixed interest: 7.50% — at 7.50% the figures are Fixed $2,528.27 (unrounded 2528.272094)/mo; ARM $2,271.16 (unrounded 2271.156005)/mo then $2,733.10 (unrounded 2733.102811)/mo; ARM wins by $2,975.75 (unrounded 2975.751004) interest over 10 years; at the upper neighbor the figures are Fixed $2,528.27 (unrounded 2528.272094)/mo; ARM $2,271.16 (unrounded 2271.156005)/mo then $2,793.53 (unrounded 2793.526128)/mo; Fixed wins by $1,664.06 (unrounded 1664.057973) interest over 10 years; at the lower neighbor the figures are Fixed $2,528.27 (unrounded 2528.272094)/mo; ARM $2,271.16 (unrounded 2271.156005)/mo then $2,673.25 (unrounded 2673.246355)/mo; ARM wins by $7,608.37 (unrounded 7608.371976) interest over 10 years — verdict: STEP.
• Smallest fixed period for the ARM interest to stay no more than the fixed interest: 5 years — at 5 years the figures are Fixed $2,528.27 (unrounded 2528.272094)/mo; ARM $2,271.16 (unrounded 2271.156005)/mo then $2,733.10 (unrounded 2733.102811)/mo; ARM wins by $2,975.75 (unrounded 2975.751004) interest over 10 years; at the lower neighbor the figures are Fixed $2,528.27 (unrounded 2528.272094)/mo; ARM $2,271.16 (unrounded 2271.156005)/mo then $2,746.61 (unrounded 2746.608140)/mo; Fixed wins by $5,216.44 (unrounded 5216.439573) interest over 10 years; at the upper neighbor the figures are Fixed $2,528.27 (unrounded 2528.272094)/mo; ARM $2,271.16 (unrounded 2271.156005)/mo then $2,719.21 (unrounded 2719.213752)/mo; ARM wins by $10,909.87 (unrounded 10909.866051) interest over 10 years — verdict: STEP.
• Largest fixed rate for the fixed interest to stay no more than the ARM interest: 6.25% — at 6.25% the figures are Fixed $2,462.87 (unrounded 2462.868802)/mo; ARM $2,271.16 (unrounded 2271.156005)/mo then $2,733.10 (unrounded 2733.102811)/mo; Fixed wins by $7,026.30 (unrounded 7026.298028) interest over 10 years; at the upper neighbor the figures are Fixed $2,528.27 (unrounded 2528.272094)/mo; ARM $2,271.16 (unrounded 2271.156005)/mo then $2,733.10 (unrounded 2733.102811)/mo; ARM wins by $2,975.75 (unrounded 2975.751004) interest over 10 years; at the lower neighbor the figures are Fixed $2,398.20 (unrounded 2398.202101)/mo; ARM $2,271.16 (unrounded 2271.156005)/mo then $2,733.10 (unrounded 2733.102811)/mo; Fixed wins by $16,994.25 (unrounded 16994.253796) interest over 10 years — verdict: STEP.
• Largest ARM initial rate for the ARM interest to stay no more than the fixed interest: 5.50% — at 5.50% the figures are Fixed $2,528.27 (unrounded 2528.272094)/mo; ARM $2,271.16 (unrounded 2271.156005)/mo then $2,733.10 (unrounded 2733.102811)/mo; ARM wins by $2,975.75 (unrounded 2975.751004) interest over 10 years; at the upper neighbor the figures are Fixed $2,528.27 (unrounded 2528.272094)/mo; ARM $2,334.29 (unrounded 2334.291426)/mo then $2,742.02 (unrounded 2742.017508)/mo; Fixed wins by $2,453.86 (unrounded 2453.856432) interest over 10 years; at the lower neighbor the figures are Fixed $2,528.27 (unrounded 2528.272094)/mo; ARM $2,208.81 (unrounded 2208.814809)/mo then $2,723.91 (unrounded 2723.906351)/mo; ARM wins by $8,409.59 (unrounded 8409.586681) interest over 10 years — verdict: STEP.
• Largest horizon for the ARM interest to stay no more than the fixed interest: 10 years — at 10 years the figures are Fixed $2,528.27 (unrounded 2528.272094)/mo; ARM $2,271.16 (unrounded 2271.156005)/mo then $2,733.10 (unrounded 2733.102811)/mo; ARM wins by $2,975.75 (unrounded 2975.751004) interest over 10 years; at the upper neighbor the figures are Fixed $2,528.27 (unrounded 2528.272094)/mo; ARM $2,271.16 (unrounded 2271.156005)/mo then $2,733.10 (unrounded 2733.102811)/mo; Fixed wins by $421.04 (unrounded 421.035373) interest over 11 years; at the lower neighbor the figures are Fixed $2,528.27 (unrounded 2528.272094)/mo; ARM $2,271.16 (unrounded 2271.156005)/mo then $2,733.10 (unrounded 2733.102811)/mo; ARM wins by $6,384.17 (unrounded 6384.171319) interest over 9 years — verdict: STEP.
• Largest ARM initial rate for the phase-1 payment to stay at or below $2,000: 4.25% — at 4.25% the figures are Fixed $2,528.27 (unrounded 2528.272094)/mo; ARM $1,967.76 (unrounded 1967.759564)/mo then $2,684.24 (unrounded 2684.243466)/mo; ARM wins by $30,176.11 (unrounded 30176.112728) interest over 10 years; at the upper neighbor the figures are Fixed $2,528.27 (unrounded 2528.272094)/mo; ARM $2,026.74 (unrounded 2026.741239)/mo then $2,694.60 (unrounded 2694.595863)/mo; ARM wins by $24,731.00 (unrounded 24731.003417) interest over 10 years; at the lower neighbor the figures are Fixed $2,528.27 (unrounded 2528.272094)/mo; ARM $1,909.66 (unrounded 1909.661182)/mo then $2,673.60 (unrounded 2673.596570)/mo; ARM wins by $35,622.45 (unrounded 35622.451317) interest over 10 years — verdict: STEP.

What the defaults assume

The defaults are a $400,000 loan, fixed 6.50% over 30 years against an ARM at 5.50% for 5 years then 7.50%, compared over 10 years — the most common fixed-versus-adjustable choice in 2026, with the ARM winning by $2,975.75 of interest over the horizon and the fixed loan winning by $46,022.25 over the full term. They are a starting point, not a benchmark: your loan may be $300,000, your fixed period 10 years, your horizon 5 — and the right answer for you is the one your numbers describe. Change the loan, the rates, the period, the term and the horizon to your own and the calculator recomputes instantly. Compare interest over the horizon you will actually hold the loan, and remember the winner flips when the horizon grows.

These notes repeat in every explainer section because this page is built to be read start to finish: the defaults are one comparison, not a standard; the horizon decides the winner; the adjustment is on the remaining balance, not the original loan; and interest, not paid, is the fair comparison.

Output · formula · meaning

Who uses this

• A homebuyer choosing between a fixed loan and an ARM — over 10 years the ARM wins by $2,975.75 of interest, but over 30 years the fixed loan wins by $46,022.25, so the choice turns on how long they will stay.
• A homeowner planning to sell in five years — the whole horizon sits inside the fixed period, so the ARM wins by $20,028.46 and never adjusts.
• A refinancer weighing a shorter term — a 15-year term means the ARM wins by $7,229.37, because a shorter term means less time at the adjusted rate.
• A financial planner showing a client the trade-off — the largest adjusted rate for the ARM to still win is 7.50%, and at 7.75% the fixed loan wins by $1,664.06.

Accuracy & limitations

The calculator uses the closed-form amortization formula — the payment that amortizes the loan exactly, and the balance after any number of months — and every figure on this page is checked against an iterative month-by-month schedule to the cent, and against an independent model. What it cannot do is predict the adjusted rate: it takes the rate you give it and holds it for the rest of the term, so a real ARM with caps, margins and index moves will adjust differently — if your ARM adjusts every year after the fixed period, this is a one-adjustment approximation, not a forecast. It also leaves out taxes, insurance, PMI and closing costs, so the comparison is principal and interest only — the mortgage calculator adds the rest. And the page prints the unrounded figures so the rounding does not mislead you — the fixed payment is $2,528.27, unrounded 2528.272094, and the interest gap is $2,975.75, unrounded 2975.751004.

Cite this calculator

A fixed-rate mortgage charges one rate for the whole term; an adjustable-rate mortgage charges its initial rate for a fixed period, then re-amortizes the remaining balance at the adjusted rate over the remaining term. On the defaults — $400,000, fixed 6.50% over 30 years against an ARM at 5.50% for 5 years then 7.50%, over a 10-year horizon — the fixed payment is $2,528.27 a month, the ARM pays $2,271.16 a month then $2,733.10 a month, and the ARM wins by $2,975.75 of interest over 10 years. Largest adjusted rate for the ARM to still win: 7.50%. Smallest fixed period for the ARM to still win: 5 years. Largest fixed rate for the fixed loan to still win: 6.25%. Largest ARM initial rate for the ARM to still win: 5.50%. Largest horizon for the ARM to still win: 10 years. Largest ARM initial rate for the phase-1 payment to stay at or below $2,000: 4.25%. Source: Bright Side Kit, brightoolbox.com.

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