Choosing between a fixed-rate and variable-rate (ARM) mortgage affects both your initial payment and your exposure to rising interest rates. This calculator compares total payment costs over the years you plan to hold the loan.
How to use this calculator
- Enter loan amount, fixed rate, and starting variable rate.
- Enter loan term and how many years you expect to hold the mortgage.
- Enter expected variable rate change over that hold period.
- Review total costs, payment comparison, and risk guidance.
Formula
Fixed payments use a constant rate for the hold period. Variable payments start at the variable rate and adjust linearly by the expected rate change, with payments recalculated annually on the remaining balance.
Example
On a $320,000 loan held 7 years, a 6.5% fixed rate may cost more in total payments than a 5.75% variable rate that rises 1.5% over the period — but the variable path carries rate risk if you hold longer.
Frequently asked questions
- When is a variable-rate mortgage worth it?
- Variable rates often start lower and suit buyers who plan to sell or refinance within a few years before rates rise significantly.
- What if rates rise more than expected?
- This calculator uses your estimated rate change. Stress-test with higher increases to see if you could still afford payments.