Fixed-Rate vs. Adjustable-Rate Mortgage: What’s the Difference?

2 Min Read
Published July 19, 2022
Couple at home discussing and comparing a fixed-rate mortgage vs. an adjustable-rate mortgage (ARM).
Written By
Reviewed By

The biggest difference between a fixed-rate mortgage and an adjustable-rate mortgage, aka an ARM, is that the interest rate on a fixed-rate mortgage never changes, while the rate on an ARM may go up or down periodically.

If you’re trying to decide between a fixed vs. adjustable rate-mortgage, it’s important to understand the advantages and disadvantages of both types of interest rates. Here’s a rundown of the major differences between the two:

Fixed-Rate vs. Adjustable-Rate Mortgages

Fixed-rate mortgageAdjustable-rate mortgage or ARM
Interest rate– Based on market conditions and locked in when you take out the mortgage.
– Stays the same for the life of the loan.
– Starts off lower compared with the interest rate on a fixed-rate mortgage.
– Adjusts periodically based on market conditions after the fixed period ends.
Total interest paidDetermined at the start of the loan.Could increase or decrease depending on how the interest rate adjusts.
Level of riskLower risk.Higher risk.
Monthly paymentThe principal and interest payments remain stable.The principal and interest payments can fluctuate.
PopularityMore popular among homebuyers.Less popular among homebuyers.
Makes sense if …– You want no surprises in your monthly mortgage payment.
– You can’t afford increases to your monthly payment.
– You plan to live in the same place for long time.
– Interest rates are low.
– You’re confident you can afford any increases to your monthly mortgage payment.
– You’re more concerned about short-term costs.
– You plan to sell your home soon, before the initial fixed period with the lower rate ends.

FAQ: Adjustable-Rate Mortgage vs. Fixed-Rate Mortgage

Here are the answers to some frequently asked questions about ARMs vs. fixed mortgages.


Ready for more learning?

Here’s some other helpful articles

Related Articles

**itsHome, a LMB Mortgage Services, Inc. company, is not acting as a lender or broker. The information provided by you to itsHome is not an application for a mortgage loan, nor is it used to pre-qualify you with any lender. If you are contacted by a lender or broker advertising within our network, your quoted rate may be higher depending on your property location, credit score, loan-to-value ratio, debt-to-income ratio, and/or other factors. itsHome does not offer its matching services in all states. This loan may not be available for all credit types, and not all service providers in the itsHome network offer this or other products with interest-only options. The information that we provide is from companies which itsHome and its partners may receive compensation. This compensation may influence the selection, appearance, and order of appearance on this site. The information provided by itsHome does not include all financial services companies or all of their available product and service offerings. We use cookies to track data and provide you with the best possible experience. By proceeding you consent to the use of these cookies. For more information, see our Privacy Policy.

itsHome, a LMB Mortgage Services, Inc. company NMLS #167283,