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Adjustable Rate Mortgages vs Fixed Rate Mortgages [Infographic]

November 09, 2021
Exterior of the Lumen home in Denver, CO by Brookfield Residential

Adjustable rate mortgages and fixed rate mortgages are common home loan types with big differences. Choosing the wrong type for your situation could cost you a lot. Each loan type is pretty much like their names suggests: A fixed rate locks a specific interest rate for the length of the loan while the rate for an ARM can adjust up or down over time. Most lenders offer both loan types. 

Whether to choose an adjustable rate mortgage vs. a fixed rate mortgage depends on several factors. The current market interest rates, your financial situation and plans for the home or a combination of these might influence the best decision for you. If you intend to keep the home and/or the loan for only a few years or several can also be a contributing factor in your decision. Below are a few pros and cons to keep in mind about each. Of course, it’s best to consult with a lending professional before finalizing your decision.

Adjustable vs Fixed Rate Mortgages Infographic

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Adjustable Rate Mortgages vs Fixed Rate Mortgages [Infographic]

Know the pros and cons of these two popular loan types before you sign on the line.

Adjustable Rate Mortgages

Adjustable Rate Mortgages (ARM):

  • The interest rate adjusts with market fluctuations
  • Rates start lower, but can rise over time [1]
  • Total loan cost is unpredictable
  • Unpredictable monthly payment
  • Comfortable for higher-risk homebuyers
  • Rate can go down, lowering payments
  • Possible bargain if you plan to own your home for a short time

Fixed Rate Mortgage

Fixed Rate:

  • The interest rate is fixed for life of loan
  • Rates are often higher, but constant [1]
  • Total loan cost is known
  • Predictable monthly payment
  • Comfortable for low-risk homebuyers
  • Must refinance to get lower rate
  • Better for those planning to stay in their home long-term


  • Usual # of years ARMS have initial fixed low rates: 3 to 5 years [2]
  • 2% of all 2020 homebuyers chose ARMs [3]89% of 2020 homebuyers chose a fixed rate mortgage [3]
  • Most common loan term for both ARMs and Fixed rate: 30 years

https://www.consumerfinance.gov/owning-a-home/loan-options/#interest-rate-expand-header [1]

https://www.consumerfinance.gov/ask-cfpb/if-i-am-considering-an-adjustable-rate-mortgage-arm-what-should-i-look-out-for-in-the-fine-print-en-1947/ [2]

https://www.nar.realtor/sites/default/files/documents/2020-generational-trends-report-03-05-2020.pdf slide 94 [3]