A mortgage comparison calculator shows how a fixed-rate mortgage, a fully amortizing adjustable-rate mortgage, and an interest-only adjustable-rate mortgage would each perform on the same loan amount.
The amount you're borrowing, applied to all three mortgage types.
The same term is used for every mortgage type.
Stays the same for the entire term.
The rate charged during the initial fixed period.
How many months before the rate starts adjusting.
Rate increase applied at each adjustment after the fixed period.
The maximum rate this loan can ever reach.
The rate charged during the initial fixed period.
How many months before the rate starts adjusting.
Rate increase applied at each adjustment after the fixed period.
The maximum rate this loan can ever reach.
These results are estimates, not predictions. They're calculated from the figures you entered and assume your rate of return and inflation rate hold steady every year, which real markets don't do. Change any input and the result changes. Use this to compare scenarios, not to plan around a specific number.
| Savings | Fully Amortizing ARM | Interest Only ARM |
|---|---|---|
| Initial Savings on Monthly Payments | $91.45 | $32,818.08 |
| Payment Savings First Year | $1,097.36 | $393,816.90 |
| Payment Savings For Four Years | $1,097.36 | $393,816.90 |
| Detail | Fixed Rate Mortgage | Fully Amortizing ARM | Interest Only ARM |
|---|---|---|---|
| Loan Amount | $400,000 | $400,000 | $400,000 |
| Term (Years) | 1 | 1 | 1 |
| Interest Rate | 4.5% | 4% | 4% |
| Highest Interest Rate | 4.50% | 4.00% | 4.00% |
| Initial Monthly Payment | $34,151.41 | $34,059.96 | $1,333.33 |
| Payment After Four Years | $0.00 | $0.00 | $0.00 |
| First Year Interest | $9,816.90 | $8,719.54 | $16,000.00 |
| First Year Principal | $400,000.00 | $400,000.00 | $0.00 |
| First Year Payment | $409,816.90 | $408,719.54 | $16,000.00 |
| Four Year Interest | $9,816.90 | $8,719.54 | $16,000.00 |
| Four Year Principal | $400,000.00 | $400,000.00 | $0.00 |
| Four Year Payment | $409,816.90 | $408,719.54 | $16,000.00 |
| Total Interest | $9,816.90 | $8,719.54 | $16,000.00 |
| Total Payments | $409,816.90 | $408,719.54 | $16,000.00 |
| Ending Balance | $0.00 | $0.00 | $400,000.00 |
| Month | Fixed Rate Mortgage | Fully Amortizing ARM | Interest Only ARM | |||
|---|---|---|---|---|---|---|
| Payment | Balance | Payment | Balance | Payment | Balance | |
| Start | — | $400,000.00 | — | $400,000.00 | — | $400,000.00 |
| 1 | $34,151.41 | $367,348.59 | $34,059.96 | $367,273.37 | $1,333.33 | $400,000.00 |
| 2 | $34,151.41 | $334,574.74 | $34,059.96 | $334,437.65 | $1,333.33 | $400,000.00 |
| 3 | $34,151.41 | $301,677.99 | $34,059.96 | $301,492.49 | $1,333.33 | $400,000.00 |
| 4 | $34,151.41 | $268,657.87 | $34,059.96 | $268,437.50 | $1,333.33 | $400,000.00 |
| 5 | $34,151.41 | $235,513.93 | $34,059.96 | $235,272.33 | $1,333.33 | $400,000.00 |
| 6 | $34,151.41 | $202,245.70 | $34,059.96 | $201,996.61 | $1,333.33 | $400,000.00 |
| 7 | $34,151.41 | $168,852.71 | $34,059.96 | $168,609.97 | $1,333.33 | $400,000.00 |
| 8 | $34,151.41 | $135,334.50 | $34,059.96 | $135,112.04 | $1,333.33 | $400,000.00 |
| 9 | $34,151.41 | $101,690.59 | $34,059.96 | $101,502.45 | $1,333.33 | $400,000.00 |
| 10 | $34,151.41 | $67,920.53 | $34,059.96 | $67,780.83 | $1,333.33 | $400,000.00 |
| 11 | $34,151.41 | $34,023.82 | $34,059.96 | $33,946.81 | $1,333.33 | $400,000.00 |
| 12 | $34,151.41 | $0.00 | $34,059.96 | $0.00 | $1,333.33 | $400,000.00 |
Enter your mortgage amount, term, and rate for the fixed-rate option, then enter the initial rate, months rate fixed, expected adjustment, and rate cap for both the fully amortizing ARM and the interest-only ARM. The calculator shows your monthly payment, remaining balance, and total interest for all three side by side.
Mortgage amount is your loan principal, used across all three comparisons. Term in years sets the length of the fixed-rate loan.
Fixed rate is the interest rate you'd pay for the life of the fixed-rate mortgage. It doesn't change.
Initial interest rate is the starting rate on each ARM option, typically lower than a comparable fixed rate.
Months rate fixed is how long the ARM's initial rate holds before it can adjust.
Expected adjustment is how much you expect the rate to change at each adjustment period after the fixed period ends.
Interest rate cap is the highest the ARM's rate can climb over the life of the loan, regardless of market conditions.
A fixed-rate mortgage applies the same rate to principal and interest for the full term, so your payment never changes. A fully amortizing ARM works the same way during its fixed period, then adjusts, still paying down both principal and interest throughout. An interest-only ARM keeps your payment low during the interest-only period, since that payment covers interest alone, which means your balance doesn't decrease at all until that period ends and the loan converts to a fully amortizing payment, at which point the payment increases substantially to pay off the remaining balance over the shortened time left.
The calculator's Result Summary shows loan amount, rate, and initial monthly payment for each option, along with first-year and four-year totals for interest, principal, and payments. The ARM vs. Fixed comparison shows your initial monthly savings from choosing an ARM over the fixed rate, plus how those savings accumulate over time. The full payment schedule shows month-by-month payment and balance for all three, so you can see exactly when an ARM's low introductory payment gives way to a higher one.
The interest rate cap limits how high your ARM rate can eventually go, but it doesn't predict what your rate will actually be after the fixed period ends. Budgeting for the capped rate, not just the initial rate, is the safer way to use this calculator.
A fiduciary financial advisor can help you weigh the certainty of a fixed rate against the lower initial payments an ARM offers, based on how long you plan to stay in the home. Matching with an advisor is free and comes with no pressure to commit.
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