ARM vs Fixed Rate Mortgage Calculator

Using ACalculator, you can now analyze and compare an Adjustable-rate Mortgage (ARM) with a Fixed Rate Mortgage. In case of adjustable rate mortgage, the interest rate (so the monthly payment) fluctuates over payment periods while they remain constant in case of fixed rate mortgage. The integrated reports are handy to find out monthly and yearly amortization schedules.

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Fixed Rate Mortgage
Mortgage with unchanging rate of interest and a flat monthly payment throughout the repayment phase. Fixed rate mortgage terms can vary from 5 years to 50 years.
Fully Amortizing ARM
Types of ARM with no balloon payment options. So, you must fully pay off the loan within the scheduled term length. Within this repayment time, fixed rate is charged for a certain period and after that, adjustable rates are applied for the remaining balances. By ARM, we actually indicate the fully amortizing type of ARMs. Following table shows the common terms for ARM:

Common Adjustable Rate Mortgages
ARM Type Months Fixed
10/1 ARM Fixed for 120 months, adjusts annually for the remaining term of the loan.
7/1 ARM Fixed for 84 months, adjusts annually for the remaining term of the loan.
5/1 ARM Fixed for 60 months, adjusts annually for the remaining term of the loan.
3/1 ARM Fixed for 36 months, adjusts annually for the remaining term of the loan.
Interest Only ARM
This type of ARM requires you to pay the monthly interests only and make balloon payment at the end of the term to adjust the remaining principal balance. A ceiling (highest limit) is set for the interest rate of interest only ARM. ACalculator uses 12% interest rate cap by default.
Mortgage amount
Original balance of the mortgage.
Term in years
The duration of repayment. This is the term length over which you are supposed to fully offset the due amount.
Expected rate change
Your anticipated change in the rate of interest after the fixed term period is over. Using this calculator you can adjust up to 3% positive or negative interest rate change.
Interest rate
Rate of interest on this mortgage. This rate is lower for Adjustable Rate Mortgages.
Months rate fixed
Total number of months you will pay fixed monthly payments and interests. After this number of months, adjustable rate will come into play.
Interest rate cap
The upper limit of interest rate on this Adjustable Rate Mortgage.
Monthly payment
Total amount paid to repay interest and principal during each month in case of fixed rate mortgage. For interest only ARM, the monthly payment is the amount you pay as interest only payment.