ARM vs Fixed Rate Mortgage Calculator

An ARM can be the right choice if you plan to sell or refinance before the initial period ends. The lower teaser rate saves real money — but only if you're out before it adjusts.

• ✓ You plan to move within 5–7 years
• ✓ You expect rates to fall before adjustment
• ✓ You'll refinance before the initial period ends
• ✗ You plan to stay long-term in the home
• ✗ You can't afford the worst-case payment

Most ARMs have three caps that limit how much the rate can increase:

• Initial cap — max increase at first adjustment (often 2–5%)
• Periodic cap — max increase per subsequent adjustment (often 2%)
• Lifetime cap — max total increase over the loan's life (often 5–6%)

Always stress-test the lifetime cap scenario — that's the worst case this calculator shows. If you can't afford it, a fixed rate is safer.

Once you've decided, use the Mortgage Calculator for your full PITI payment, or the Refinance Calculator to plan an exit from your ARM.