Choosing between a fixed-rate and an adjustable-rate mortgage (ARM) is one of the most important decisions in your home loan. This guide compares fixed vs adjustable rate mortgages and helps you decide which fits your 2026 plans.
The short answer: a fixed-rate mortgage keeps the same rate for the life of the loan, while an ARM has a fixed introductory period then adjusts. ARMs can start lower but carry rate risk. See our fixed-rate mortgage page, explore loan options, and use the mortgage calculator.
How a fixed-rate mortgage works
A fixed-rate mortgage has an interest rate that never changes. Your principal and interest payment stays the same for the entire term (commonly 15 or 30 years). Only taxes and insurance can change over time.
Benefits:
- Predictable payment
- No rate-increase risk
- Simple to understand
How an adjustable-rate mortgage works
An ARM has a fixed introductory period, then the rate adjusts periodically based on a market index plus a margin. For example, a 7/6 ARM is fixed for 7 years, then adjusts every 6 months.
ARM terms explained: initial period, index, margin, caps
- Initial period: the years your rate is fixed before the first adjustment.
- Index: the market rate your loan follows (such as SOFR).
- Margin: the lender's added percentage.
- Caps: limits on how much the rate can rise per adjustment and over the life of the loan.
Side-by-side comparison
| Feature | Fixed-Rate | ARM |
|---|---|---|
| Rate | Never changes | Fixed then adjusts |
| Payment | Predictable | Can rise or fall |
| Best for | Long-term owners | Short-term owners |
Who may consider an ARM
An ARM may fit if you:
- Plan to sell or refinance before the fixed period ends
- Are comfortable with some rate risk
- Want a lower initial payment
Questions to ask before choosing
- How long will I stay in this home?
- Can I afford the payment if the rate rises to the cap?
- How large is the rate difference today?
When you are ready, get a free quote or set up rate alerts.
This article is for general information only and is not a commitment to lend. ARM rates and caps depend on your loan and lender. Examples are illustrative only.
