Fixed vs Adjustable Rate Mortgage

Introduction

Fixed vs adjustable rate is a key choice. Fixed rates offer predictability; ARMs may start lower but can change. Your decision depends on how long you plan to keep the loan and your tolerance for payment uncertainty. See What Is a Fixed Rate Mortgage, What Is an Adjustable Rate Mortgage, and What Is a Loan Term.

Frequently Asked Questions

What is the main difference?

A fixed rate stays the same for the entire term; an ARM has an initial fixed period, then the rate can adjust. Fixed offers predictability; ARMs may start with a lower rate.

When is a fixed rate better?

Fixed rates are often better when you plan to stay long-term, want payment certainty, or when fixed rates are already low.

When is an ARM better?

ARMs can be better if you plan to sell or refinance before the first adjustment, or expect to move within a few years. The lower initial rate can save money short-term.

Are ARM initial rates always lower?

Often yes, but not always. Compare the APR and total cost over your expected ownership period.