Fixed vs Variable Mortgage Rate Calculator: Which Wins?

What does $279.65 a month mean?

It means that, on the defaults, the ARM costs $279.65 a month less than the fixed loan: $2,468.07 a month against $2,747.72. The fixed payment is $2,747.72 a month — a $400,000 loan at 7.32% over 30 years — and the ARM payment is $2,468.07 a month — the same $400,000 at 6.27% over 30 years. Over the first 60 months the monthly saving adds up to $16,778.90. But the monthly saving is only half the comparison: the cheaper loan also pays principal down faster. After 60 months the fixed balance is $377,785.82 and the ARM balance is $373,437.90 — the ARM is $4,347.92 ahead on balance too. Add the payments and the balance together and the 5-year total cost is $542,649.17 fixed against $521,522.35 ARM: the ARM wins by $21,126.81. The total cost — payments plus what you still owe — is the fair comparison, because a cheaper payment that leaves a bigger balance is not really cheaper.

Three things to check before you trust the number

The adjusted rate is a scenario, not a forecast. The 7.00% on the defaults is a what-if: at 7.00% the adjusted payment is $2,639.38 a month, still below the fixed $2,747.72; at 8.00% it is $2,882.25 a month, above it. The real adjustment is the index — SOFR for most new ARMs — plus the lender's margin, typically 2.5–3.0%, and nobody knows what SOFR will be in five years. The calculator also does not model rate caps: a typical 5/1 ARM caps the first adjustment at 2 points and later ones at 1 point a year, with a lifetime cap around 5 points, so the adjusted rate cannot jump straight to 8.00% from 6.27% in one step — it would take two adjustments. Change the adjusted rate to the worst case your caps allow and see whether the ARM still wins.

The 5-year horizon is the decision. A 5/1 ARM only makes sense if the fixed period covers your plans: if you sell or refinance before month 61, the adjustment never happens and the $16,778.90 saving is banked. If you stay past month 61, the adjusted rate decides everything — at 8.00% the ARM keeps its lead until month 174, but at 8.53% it loses the lead within 10 years. The break-even month is the number to watch, not the monthly saving.

Monthly saving and total cost can point different ways. At a 6.50% fixed rate the ARM still saves $60.20 a month, yet the fixed loan wins the 10-year total cost by $4,384.21 — the break-even is Month 91 (7.5833333333 years). A small monthly saving is fragile: a cheaper fixed rate, a higher adjustment, or a longer stay can all flip it. Compare the total cost at your horizon, not the payment alone.

Worked example

On the defaults: $400,000 loan, 30 years, fixed 7.32% against a 5/1 ARM at 6.27% adjusting to 7.00%.

1. Fixed payment: $400,000 at 7.32% over 30 years is $2,747.72 a month.
2. ARM payment: $400,000 at 6.27% over 30 years is $2,468.07 a month.
3. The monthly saving: $2,747.72 − $2,468.07 is $279.65 a month.
4. The 5-year saving: $279.65 × 60 months is $16,778.90.
5. The balances: after 60 months the fixed balance is $377,785.82 and the ARM balance is $373,437.90 — the ARM is $4,347.92 ahead.
6. The 5-year total cost: 60 fixed payments plus the balance is $542,649.17; 60 ARM payments plus the balance is $521,522.35.
7. The lead: $542,649.17 − $521,522.35 is $21,126.81 — the ARM wins.
8. The adjustment: at 7.00% the payment on the $373,437.90 balance over 25 years is $2,639.38 a month — still below the fixed $2,747.72.

And the other way: adjusted to 8.00% the payment is $2,882.25 a month, above the fixed payment — yet the ARM keeps its total-cost lead until month 174, because the first five years banked $16,778.90. And the adjusted rate that exactly equals the fixed payment is 7.451%: at 7.451% the adjusted payment is $2,747.78, within $0.06 of the fixed $2,747.72.

Every branch, checked

• ARM adjusts to 8.00%: ARM adjusts to 8.00%: Fixed $2,747.72/mo at 7.32%, ARM $2,468.07/mo at 6.27%: the ARM saves $279.65/mo, ARM wins by $21,126.81 at 5 years. ARM adjusts to 8.00% — the adjusted payment is $2,882.25 a month, above the fixed $2,747.72. Even so, the ARM keeps its total-cost lead until Month 174 (14.5 years) — month 174, 14.5 years — because the first five years banked $16,778.90. At 10 years the ARM still wins by $9,910.67.
• ARM adjusts to 6.50%: ARM adjusts to 6.50%: Fixed $2,747.72/mo at 7.32%, ARM $2,468.07/mo at 6.27%: the ARM saves $279.65/mo, ARM wins by $21,126.81 at 5 years. ARM adjusts to 6.50% — the adjusted payment is $2,521.48 a month, still below the fixed $2,747.72. The ARM never gives its lead back: at 10 years it wins by $37,949.59, more than at 7.00%.
• ARM adjusts to 7.32% (same as fixed): ARM adjusts to 7.32% (same as fixed): Fixed $2,747.72/mo at 7.32%, ARM $2,468.07/mo at 6.27%: the ARM saves $279.65/mo, ARM wins by $21,126.81 at 5 years. ARM adjusts to 7.32%, the same as the fixed rate — the adjusted payment is $2,716.10 a month, still below the fixed $2,747.72 because the balance is smaller. At 10 years the ARM wins by $22,655.97.
• 7-year horizon: 7-year horizon: Fixed $2,747.72/mo at 7.32%, ARM $2,468.07/mo at 6.27%: the ARM saves $279.65/mo, ARM wins by $24,147.60 at 7 years. 7-year horizon — the ARM wins by $24,147.60 at 7 years, between the 5-year lead of $21,126.81 and the 10-year lead of $28,634.88. The adjusted payment is $2,639.38 a month from month 61.
• 10-year horizon: 10-year horizon: Fixed $2,747.72/mo at 7.32%, ARM $2,468.07/mo at 6.27%: the ARM saves $279.65/mo, ARM wins by $28,634.88 at 10 years. 10-year horizon — the ARM wins by $28,634.88 at 10 years. Five years at the adjusted rate have not undone the head start: the first five years saved $16,778.90 and left the ARM $4,347.92 ahead on balance.
• Loan $300,000: Loan $300,000: Fixed $2,060.79/mo at 7.32%, ARM $1,851.06/mo at 6.27%: the ARM saves $209.74/mo, ARM wins by $15,845.11 at 5 years. Loan $300,000 — the fixed payment is $2,060.79 a month and the ARM is $1,851.06, a saving of $209.74 a month. At 5 years the ARM wins by $15,845.11; at 10 years by $21,476.16.
• Loan $500,000: Loan $500,000: Fixed $3,434.65/mo at 7.32%, ARM $3,085.09/mo at 6.27%: the ARM saves $349.56/mo, ARM wins by $26,408.52 at 5 years. Loan $500,000 — the fixed payment is $3,434.65 a month and the ARM is $3,085.09, a saving of $349.56 a month. At 5 years the ARM wins by $26,408.52; at 10 years by $35,793.61.
• Fixed rate 6.50%: Fixed rate 6.50%: Fixed $2,528.27/mo at 6.50%, ARM $2,468.07/mo at 6.27%: the ARM saves $60.20/mo, ARM wins by $4,617.88 at 5 years. Fixed rate 6.50% — the fixed payment falls to $2,528.27 a month, so the ARM saves only $60.20 a month. The ARM still wins by $4,617.88 at 5 years, but at 10 years the fixed loan wins by $4,384.21 — the break-even is Month 91 (7.5833333333 years).
• ARM initial rate 5.50%: ARM initial rate 5.50%: Fixed $2,747.72/mo at 7.32%, ARM $2,271.16/mo at 5.50%: the ARM saves $476.57/mo, ARM wins by $36,537.39 at 5 years. ARM initial rate 5.50% — the ARM payment is $2,271.16 a month, a saving of $476.57 a month. At 5 years the ARM wins by $36,537.39; at 10 years by $45,252.43. The adjusted payment is $2,613.97 a month.
• Fixed period 7 years: Fixed period 7 years: Fixed $2,747.72/mo at 7.32%, ARM $2,468.07/mo at 6.27%: the ARM saves $279.65/mo, ARM wins by $21,126.81 at 5 years. Fixed period 7 years — the ARM runs at 6.27% for 84 months, saving $23,490.45 before it adjusts, and the adjusted payment is $2,629.60 a month. At 10 years the ARM wins by $34,360.66.

The reverses, worked backwards

• ARM initial rate that matches the fixed payment: 7.32 — at 7.32 the figures are Fixed $2,747.72/mo at 7.32%, ARM $2,747.72/mo at 7.32%: a tie on total cost at 5 years; 5-year total cost: fixed $542,649.17 vs ARM $542,649.17 (ARM leads by $0.00); adjusted payment $2,670.11; break-even month 1; at the lower neighbor the figures are Fixed $2,747.72/mo at 7.32%, ARM $2,745.00/mo at 7.31%: the ARM saves $2.72/mo, ARM wins by $201.70 at 5 years; 5-year total cost: fixed $542,649.17 vs ARM $542,447.46 (ARM leads by $201.70); adjusted payment $2,669.84; break-even never within 30 years; at the upper neighbor the figures are Fixed $2,747.72/mo at 7.32%, ARM $2,750.44/mo at 7.33%: the ARM saves −$2.72/mo, Fixed wins by $201.71 at 5 years; 5-year total cost: fixed $542,649.17 vs ARM $542,850.88 (ARM leads by −$201.71); adjusted payment $2,670.38; break-even month 1 — verdict: STEP.
• Loan amount for a fixed payment of $2,500/mo: 364000 — at 364000 the figures are Fixed $2,500.43/mo at 7.32%, ARM $2,245.95/mo at 6.27%: the ARM saves $254.48/mo, ARM wins by $19,225.40 at 5 years; 5-year total cost: fixed $493,810.74 vs ARM $474,585.34 (ARM leads by $19,225.40); adjusted payment $2,401.84; break-even never within 30 years; at the lower neighbor the figures are Fixed $2,493.56/mo at 7.32%, ARM $2,239.78/mo at 6.27%: the ARM saves $253.78/mo, ARM wins by $19,172.58 at 5 years; 5-year total cost: fixed $492,454.12 vs ARM $473,281.54 (ARM leads by $19,172.58); adjusted payment $2,395.24; break-even never within 30 years; at the upper neighbor the figures are Fixed $2,507.30/mo at 7.32%, ARM $2,252.12/mo at 6.27%: the ARM saves $255.18/mo, ARM wins by $19,278.22 at 5 years; 5-year total cost: fixed $495,167.36 vs ARM $475,889.15 (ARM leads by $19,278.22); adjusted payment $2,408.44; break-even never within 30 years — verdict: STEP.
• Adjusted rate that equalizes the post-adjustment payment with the fixed payment: 7.451 — at 7.451 the figures are Fixed $2,747.72/mo at 7.32%, ARM $2,468.07/mo at 6.27%: the ARM saves $279.65/mo, ARM wins by $21,126.81 at 5 years; 5-year total cost: fixed $542,649.17 vs ARM $521,522.35 (ARM leads by $21,126.81); adjusted payment $2,747.78; break-even never within 30 years; at the lower neighbor the figures are Fixed $2,747.72/mo at 7.32%, ARM $2,468.07/mo at 6.27%: the ARM saves $279.65/mo, ARM wins by $21,126.81 at 5 years; 5-year total cost: fixed $542,649.17 vs ARM $521,522.35 (ARM leads by $21,126.81); adjusted payment $2,747.54; break-even never within 30 years; at the upper neighbor the figures are Fixed $2,747.72/mo at 7.32%, ARM $2,468.07/mo at 6.27%: the ARM saves $279.65/mo, ARM wins by $21,126.81 at 5 years; 5-year total cost: fixed $542,649.17 vs ARM $521,522.35 (ARM leads by $21,126.81); adjusted payment $2,748.02; break-even never within 30 years — verdict: STEP.
• Smallest adjusted rate at which the ARM loses its total-cost lead within 10 years: 8.53 — at 8.53 the figures are Fixed $2,747.72/mo at 7.32%, ARM $2,468.07/mo at 6.27%: the ARM saves $279.65/mo, ARM wins by $21,126.81 at 5 years; 5-year total cost: fixed $542,649.17 vs ARM $521,522.35 (ARM leads by $21,126.81); adjusted payment $3,014.58; break-even month 120; at the lower neighbor the figures are Fixed $2,747.72/mo at 7.32%, ARM $2,468.07/mo at 6.27%: the ARM saves $279.65/mo, ARM wins by $21,126.81 at 5 years; 5-year total cost: fixed $542,649.17 vs ARM $521,522.35 (ARM leads by $21,126.81); adjusted payment $3,012.06; break-even month 121; at the upper neighbor the figures are Fixed $2,747.72/mo at 7.32%, ARM $2,468.07/mo at 6.27%: the ARM saves $279.65/mo, ARM wins by $21,126.81 at 5 years; 5-year total cost: fixed $542,649.17 vs ARM $521,522.35 (ARM leads by $21,126.81); adjusted payment $3,017.10; break-even month 120 — verdict: STEP.
• Loan amount at which the ARM saves $300/mo: 430000 — at 430000 the figures are Fixed $2,953.80/mo at 7.32%, ARM $2,653.18/mo at 6.27%: the ARM saves $300.62/mo, ARM wins by $22,711.32 at 5 years; 5-year total cost: fixed $583,347.85 vs ARM $560,636.53 (ARM leads by $22,711.32); adjusted payment $2,837.34; break-even never within 30 years; at the lower neighbor the figures are Fixed $2,946.93/mo at 7.32%, ARM $2,647.01/mo at 6.27%: the ARM saves $299.92/mo, ARM wins by $22,658.51 at 5 years; 5-year total cost: fixed $581,991.23 vs ARM $559,332.72 (ARM leads by $22,658.51); adjusted payment $2,830.74; break-even never within 30 years; at the upper neighbor the figures are Fixed $2,960.67/mo at 7.32%, ARM $2,659.35/mo at 6.27%: the ARM saves $301.32/mo, ARM wins by $22,764.14 at 5 years; 5-year total cost: fixed $584,704.48 vs ARM $561,940.34 (ARM leads by $22,764.14); adjusted payment $2,843.93; break-even never within 30 years — verdict: STEP.
• Highest ARM initial rate whose 5-year saving still reaches $20,000: 6.06 — at 6.06 the figures are Fixed $2,747.72/mo at 7.32%, ARM $2,413.65/mo at 6.06%: the ARM saves $334.07/mo, ARM wins by $25,337.57 at 5 years; 5-year total cost: fixed $542,649.17 vs ARM $517,311.60 (ARM leads by $25,337.57); adjusted payment $2,632.70; break-even never within 30 years; at the lower neighbor the figures are Fixed $2,747.72/mo at 7.32%, ARM $2,411.08/mo at 6.05%: the ARM saves $336.65/mo, ARM wins by $25,537.94 at 5 years; 5-year total cost: fixed $542,649.17 vs ARM $517,111.22 (ARM leads by $25,537.94); adjusted payment $2,632.38; break-even never within 30 years; at the upper neighbor the figures are Fixed $2,747.72/mo at 7.32%, ARM $2,416.23/mo at 6.07%: the ARM saves $331.49/mo, ARM wins by $25,137.18 at 5 years; 5-year total cost: fixed $542,649.17 vs ARM $517,511.98 (ARM leads by $25,137.18); adjusted payment $2,633.02; break-even never within 30 years — verdict: STEP.

What the defaults assume

The defaults are a $400,000 loan over 30 years, a fixed rate of 7.32% — the Freddie Mac Primary Mortgage Market Survey rate for the week ending October 22, 2026 — against a 5/1 ARM at 6.27% for the first 5 years — the Bankrate national average on October 28, 2026 — adjusting to 7.00% at month 61, compared over 5 years. They are a starting point, not a quote: the model counts principal and interest only. Property tax, homeowners insurance, mortgage insurance, closing costs and refinancing costs are not in it — and an ARM refinance to escape a bad adjustment costs thousands in closing costs, which no monthly figure captures. The adjusted rate is a single scenario: real ARMs adjust to SOFR plus a margin of typically 2.5–3.0%, move in steps limited by caps (typically 2 points at the first adjustment, 1 point a year after, 5 points over the life of the loan), and can adjust more than once. The model assumes the adjusted rate stays flat after month 61 and that you make every payment on time. Change the adjusted rate to your caps' worst case before you trust the verdict.

These notes repeat in every explainer section because this page is built to be read start to finish: the adjusted rate is a scenario, not a forecast; the 5-year horizon is the decision; and monthly saving and total cost can point different ways.

Output · formula · meaning

Who uses this

• A buyer choosing between fixed and ARM — the ARM saves $279.65 a month and $21,126.81 over 5 years, but the answer turns on the adjusted rate and how long you stay.
• Someone who plans to move in five years — if you sell or refinance before month 61, the adjustment never happens and the $16,778.90 saving is banked.
• A borrower stress-testing the adjustment — at 8.00% the ARM keeps its lead until month 174, and at 7.451% the adjusted payment exactly equals the fixed payment: the two numbers that bound the risk.
• Anyone comparing loan sizes — at $300,000 the ARM saves $209.74 a month, and at $500,000 it saves $349.56: the saving scales with the loan.

Accuracy & limitations

Figures are the model's own totals on the numbers you type, computed to the cent from unrounded values: the payments come from the amortization factor, the balances from the amortization formula, and the total cost is the payments made plus the remaining balance — the displayed monthly saving is rounded, so the 5-year saving is the exact monthly saving times 60, not the rounded figure times 60. The real-world anchors are the Freddie Mac Primary Mortgage Market Survey for the week ending October 22, 2026 (morningstar.com/news/globe-newswire/9851396/mortgage-rates-decrease-to-732), which put the 30-year fixed rate at 7.32%; and Bankrate's 5/1 ARM rates page (bankrate.com/mortgages/5-1-arm-rates/), which put the 5/1 ARM national average at 6.27% on October 28, 2026 — the same day the Bankrate/WSJ table showed the 30-year fixed at 7.31%. Rates move daily: check the current rate before you decide, and remember the fixed rate you lock is the one in your loan estimate, not the one in a survey. The adjusted rate is a scenario, not a forecast: the real adjustment is SOFR plus a margin of typically 2.5–3.0%, limited by caps (typically 2 points at the first adjustment, 1 point a year after, 5 points lifetime), and the model holds the adjusted rate flat after month 61 instead of moving it at each adjustment. The model leaves out property tax, homeowners insurance, mortgage insurance, closing costs, refinancing costs, and the value of certainty — a fixed rate never changes, and that certainty is worth something the numbers cannot price. This page is a comparison tool, not mortgage advice: talk to a licensed loan officer before you choose.

Cite this calculator

The ARM saves $279.65 a month — fixed $2,747.72 a month at 7.32% against ARM $2,468.07 a month at 6.27% — and $16,778.90 over the first 5 years. Balances after 60 months: fixed $377,785.82 vs ARM $373,437.90 — the ARM is $4,347.92 ahead. 5-year total cost: fixed $542,649.17 vs ARM $521,522.35 — the ARM wins by $21,126.81. Adjusted to 7.00% the payment is $2,639.38; adjusted to 8.00% it is $2,882.25, and the ARM keeps its lead until month 174. The adjusted rate that exactly equals the fixed payment is 7.451%. 10-year total cost: fixed $675,516.25; ARM at 7.00% $646,881.36 (wins by $28,634.88). Rates: fixed 30-year 7.32% (Freddie Mac PMMS, October 22, 2026); 5/1 ARM 6.27% (Bankrate national average, October 28, 2026). ARM initial rate that matches the fixed payment: 7.32. Loan amount for a fixed payment of $2,500/mo: 364000. Adjusted rate that equalizes the post-adjustment payment with the fixed payment: 7.451. Smallest adjusted rate at which the ARM loses its total-cost lead within 10 years: 8.53. Loan amount at which the ARM saves $300/mo: 430000. Highest ARM initial rate whose 5-year saving still reaches $20,000: 6.06. Source: Bright Side Kit, brightoolbox.com.

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