How Do Fixed- & Adjustable-Rate Mortgages Compare?
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.

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:
- Predictable monthly payments
- Rate never changes, even if market rates go up
- Available in various terms, commonly 15, 20, or 30 years
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:
- Lower initial interest rate compared to fixed-rate loans
- Interest rate may increase or decrease after the set period
- Adjustments are based on market factors
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
- Loan Purpose: Both options are used to finance the purchase or refinance of a home.
- Repayment Term: Available in various terms – such as 15, 20, or 30 years.
- Qualification: Similar requirements for credit, income, and down payment.
- Costs: Either may come with closing costs and other fees.
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 |


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:
- How long do I plan to stay in the home?
- Do I expect my income to go up over time? If not, can I handle a possible increase in payments?
- Am I comfortable with the uncertainty of a changing rate?
- What other financial obligations do I expect to have during the life of the loan?
- What are mortgage rates predicted to do in the next five to ten years?
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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