Loan Programs / Fixed vs. Adjustable

Compare your mortgage options

Fixed-Rate vs.
Adjustable-Rate Mortgages

Two approaches. One important decision.

Choose the rate structure that fits your home plans, your budget, and your comfort with change. We’ll help you compare the benefits and tradeoffs of each.

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Fixed rate

A consistent interest rate for the life of the loan. Built for borrowers who value long-term predictability.

Adjustable rate

A fixed rate to start, with scheduled adjustments later. Worth comparing when the terms and potential future payments fit your plans.

Fixed and adjustable describe how the interest rate works—not a single set of credit or down payment requirements. Eligibility depends on the loan program, property, and lender.

The differences, side by side

What changes—and what stays the same?

Compare the whole loan, not just the starting rate.

What to compare	Fixed-rate mortgage	Adjustable-rate mortgage (ARM)
Interest rate	Stays the same for the life of the loan.	Fixed for an initial period, then adjusts according to the loan’s terms.
Principal & interest	Stays consistent on a standard fully amortizing loan.	Can increase or decrease after the initial fixed period.
Starting price	Compare the actual rate, points, and fees offered.	May offer a lower starting rate. The advantage varies by lender and market.
Main benefit	More certainty for long-term budgeting.	Potential savings during the initial fixed period.
Main tradeoff	A lower market rate does not automatically lower your rate.	Future rate changes can mean higher payments.
Planning ahead	Consider the loan term and total borrowing costs.	Understand the first adjustment, later adjustments, caps, and possible payments.

A fixed rate does not freeze your entire payment. Property taxes, homeowners insurance, mortgage insurance, and other housing expenses can change with either option.

Understand the adjustable option

An ARM starts with a fixed period.

A hybrid ARM has two phases: an initial fixed interest rate, followed by scheduled adjustments. The name helps explain the timing.

For example, a 7/6 ARM has an initial fixed-rate period of seven years, followed by adjustments every six months. The “6” refers to months—not years.

This explains a loan structure, not an advertised rate or a promise of program availability. Available terms vary by lender.

First 7 yearsInitial interest rate stays fixed

AfterwardRate adjusts every 6 months

Index + margin

The index is a market benchmark. The margin is the lender’s contractual addition. Your adjusted rate follows the loan’s calculation rules, including caps and any floor.

Initial adjustment cap

Limits the rate change at the first adjustment after the fixed period.

Subsequent adjustment cap

Limits rate changes at later scheduled adjustments.

Lifetime cap & floor

The loan sets an upper rate limit and may also set a minimum rate. Review the actual terms.

Caps limit rate changes; they do not guarantee a payment you can comfortably afford. Ask us to walk through the potential payment under the loan’s adjustment rules.

Your timeline & your comfort level

Which option deserves a closer look?

Consider a fixed rate when…

You value a predictable principal and interest payment.
You expect to keep the loan for a longer period—or your timeline is uncertain.
You prefer protection from future interest rate increases.

Consider an ARM when…

The actual initial pricing offers a meaningful benefit.
You understand the adjustment schedule and caps.
Your budget can handle potential higher payments if you keep the loan longer than planned.

Your plans can change. A planned move or refinance is not a guarantee. Home value, income, credit, and available loan options may change. Choose a loan you can manage if you stay longer than expected.

Look beyond the starting payment

Compare the complete cost.

Review the same scenario.

Compare offers using the same loan amount, term, property, and timing. Review points, lender fees, closing costs, mortgage insurance, and the expected time you’ll keep the loan.

Check the adjustable scenario.

For an ARM, review the Loan Estimate’s projected payments and adjustable interest rate information. Ask what the payment could become under the contractual limits.

An ARM’s five-year cost comparison on the Loan Estimate assumes unchanged interest rates. Actual costs can differ if the rate adjusts.

A few things worth clearing up

Questions about fixed and adjustable rates?

You don’t have to decide before reaching out. We’ll help compare the options available for your situation.

Can my payment change with a fixed-rate mortgage?

Yes. On a standard fully amortizing fixed-rate loan, principal and interest stay consistent, but taxes, homeowners insurance, mortgage insurance, and other components can change.

Can an ARM’s interest rate go down?

It may. The result depends on the index, margin, adjustment limits, and any minimum rate in your loan terms. A lower index does not guarantee a lower payment.

Is a 7/6 ARM a seven-year loan?

No. The name describes the initial fixed-rate period and how frequently the rate adjusts afterward. It does not describe the total loan term.

Can I refinance before the ARM adjusts?

You may be able to, but refinancing requires qualifying for a new loan and can involve closing costs. Future approval, rates, and home value are not guaranteed.

Is an ARM the same as a temporary buydown?

No. An ARM can change the loan’s interest rate according to its adjustment terms. A temporary buydown provides funds that reduce the borrower’s required payments for a limited period; it does not itself change the note rate.

Do fixed and adjustable loans have the same requirements?

Not necessarily. Down payment, credit, debt-to-income, reserves, property, and occupancy requirements depend on the underlying program and lender. We’ll compare eligibility along with pricing and payment risk.

Make the choice with confidence.

Let’s compare your options against your actual plans.