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ARM vs. Fixed Mortgage Calculator

Want to compare fixed and variable mortgage rates? Amplify's ARM vs. Fixed Mortgage Calculator can help.

When you take out a home mortgage, you’ll have a choice between two main types: a fixed rate and an adjustable-rate mortgage. Each has its own advantages and disadvantages.

The best way to find out which one is for you is to do the math. Use this handy ARM vs. Fixed Mortgage Calculator to weigh your options. Be sure to check the information under the tool for an explanation of the terms used.

Important Terms to Know for the ARM vs. Fixed Mortgage Calculator

To help you out with the rate calculator, we added a list of related definitions. Use this section as a reference as you use the calculator above.

General loan information

Here are the terms you’ll find under the General Loan Information heading.

Loan amount

The loan amount is simply how much you are borrowing. It is important to remember that this is not the house’s purchase price— just the money that the bank lends you. If you need to estimate your loan amount, subtract the amount you have set aside for a down payment from the home’s purchase price. This is the amount of money that you will need to borrow.

The down payment is the initial payment that a borrower puts up when purchasing a house. Homebuyers will put a percentage of the home’s value down (usually between 5% to 20%) and borrow the rest.

Years in home

Use this slider to get results based on your loan standing at a certain point in time. For example, if you select ten years in the home, the results will show what your monthly payments, interest paid, and equity built will look like after ten years of paying your mortgage.

Loan term 

The loan term is the length of your home mortgage. Mortgages are typically repaid over a 30-year, 20-year, or 15-year period. 

Fixed-Rate Loan Information

These terms are listed under the Fixed Rate Loan heading. 

Fixed-rate mortgage

Fixed-rate mortgages are a type of home loan in which the loan rate does not fluctuate over the life of the loan.

Fixed rate

The fixed rate is the interest rate on a mortgage that doesn’t change over time. Several factors determine your loan’s interest rate, including your credit score and history, the location of the house, the loan amount, the size of your down payment, the loan type, and more.

Remember, with mortgages and other types of loans, interest compounds, meaning that you’ll end up paying more than just X% on the total loan amount.

Adjustable-Rate Loan Information

These terms are listed under the Adjustable Rate Loan heading. 

Adjustable-rate mortgage (ARM)

An adjustable-rate mortgage is a type of loan in which the interest rate varies over its lifetime. There is an initial period at the beginning of the loan where the interest rate is fixed for a certain number of years. After that period, the interest rate changes periodically— usually yearly, but sometimes monthly.

Initial rate

The initial rate is the interest rate during the initial (or introductory) period of an ARM. 

Initial period 

This is the period during which the initial rate is fixed. You’ll hear terms like 3/1 ARM, 5/1 ARM, 7/1 ARM, and 10/1 ARM. The first number in all of these is the initial period, in years.

So for a 3/1 ARM, you’d pay the initial rate for 3 years. The last number is how frequently the rate can change after that period. In a 3/1 ARM, the rate can change every year after the first three are up.

Period cap

This cap limits how much the interest rate can increase from one adjustment period to the next.

Lifetime cap

This cap tells you how much the interest rate can increase in total over the lifetime of the loan.

Adjustable period 

The adjustable period represents how often the rate can adjust. So, going back to our 3/1 ARM example that we discussed earlier, the adjustable period would be 12 months (1 year).


A margin is one component of how banks determine the total interest rate on an ARM, in addition to the index rate. The margin is the amount added to the index to give you the total interest rate for your ARM. The loan’s margin is set by the lender upfront and does not change.

Current index rate

An index rate is one component of how banks determine the total interest rate on an ARM, in addition to the margin.

The index rate is an interest rate tied to a specific benchmark that reflects the general market conditions. Three common indexes include the maturity yield on one-year Treasury bills, the London Interbank Offered Rate, or the cost of funds index. The index rate is subject to change. 

Yearly index change

Estimate how much you expect the index rate to change yearly. If you are unsure, check out the current and historical index rates.


These terms are listed under the Results heading. 

Monthly payment

Mortgage loans are paid back monthly through a monthly payment. Monthly payments have four main components: principal, interest, taxes, and insurance. However, for the sake of this calculator, only principal and interest are considered.  

Max monthly payment

Max monthly payment is the highest possible amount that your monthly payment can be with an adjustable-rate loan, given the caps that you entered. 

Interest paid

The Interest paid row represents the total amount of interest that has been paid at the number of years specified under Years in Home.

Equity built

Equity is the value of a homeowner’s interest in the property. As a homeowner pays off the principal balance on their mortgage, equity increases. Because the amortization schedule of fixed-rate and adjustable-rate mortgages are different, homeowners can have a different amount of equity built up in their house at a given point.

Loan balance

The loan balance represents the total principal amount still left to pay.

Total paid

Total paid is the amount of interest and principal paid up to that point.

More Calculator Resources

Looking for more tools like the ARM vs. Fixed Mortgage Calculator to better understand and plan your finances? Amplify Credit Union has several helpful financial calculators that can help you out!

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