How Do Fixed- & Adjustable-Rate Mortgages Compare?

Jul 23, 2025 Buying A Home

Mortgages come in all different shapes and sizes with different terms, conditions, benefits, and more. Here we compare fixed- and adjustable-rate mortgages and the pros and cons for each.

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When shopping for a home loan, one of the most important decisions you’ll make is choosing between a fixed- or adjustable-rate mortgage (ARM). Understanding how each option works can help you select the option that best fits your goals and budget.

Let’s take a closer look at the similarities and key differences.

What’s A Fixed-Rate Mortgage?

A fixed-rate mortgage is a type of home loan with an interest rate that remains constant for the entire loan term, meaning the monthly principal and interest payment won’t change.

Key Features:

Best For:

Those who plan to stay in their home long term and prefer stable payments without worrying about future rate increases.

What’s An ARM?

An adjustable-rate mortgage is a loan type with an interest rate that fluctuates over time. Typically, ARMs offer a lower initial interest rate for a set period (often 5, 7, or 10 years), followed by rate adjustments at regular intervals.

For example, with a 10/10 ARM, the initial interest rate is fixed for the first 10 years and then adjusts every 10 years for the remainder of the loan.

Key Features:

Best For:

Homebuyers who plan to move, refinance, or pay off the loan before the fixed-rate period ends.

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ARMs vs. Fixed-Rate Mortgages

Both adjustable- and fixed-rate mortgages can help you achieve homeownership, but they work differently when it comes to interest rates and long-term costs. Let’s explore their similarities and where they diverge.

What They Have In Common

 Key Differences: 

Feature Adjustable-Rate Mortgage Fixed-Rate Mortgage
Interest Rate Starts fixed, then adjusts at set intervals over time Stays the same for the life of the loan
Initial Rate Typically lower during the fixed period Usually higher than the starting ARM rate
Monthly Payments (Principal & Interest) May increase or decrease after the fixed period Stays the same every month
Long-Term Cost May cost less if you sell or refinance before the rate adjusts May cost more if market rates fall
Best For Short-term stays, lower upfront payments Long-term stability and budgeting
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ARM vs. Fixed-Rate Mortgage Calculator

Compare monthly payments for these two loan types to determine the best option for you.

Which One Is Right For You?

Choosing between an adjustable- and fixed-rate mortgage depends on your financial situation, long-term goals, and risk tolerance.

Ask yourself:

If stability and peace of mind are your top priorities, a fixed-rate mortgage may be the better choice. If you’re buying a starter home or expect your income to grow in the coming years, an ARM might make sense – especially with a lower starting rate.

Feel Confident On Your Homebuying Journey With A+FCU

Choosing between an adjustable- and fixed-rate mortgage is an important decision – and you don’t have to make it alone. Whether you’re looking for predictable payments or the flexibility of a lower initial interest rate, A+FCU is here to guide you every step of the way.

Our award-winning Mortgage Team will walk you through your options, answer your questions, and help you find the loan that aligns with your goals and budget. With competitive rates, A+ personalized service, and expert support, you can feel confident in your next move.

Ready to start? Connect with us today and take the next step toward homeownership with A+FCU.

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