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Fixed-Rate or Adjustable-Rate?

To know whether a fixed-rate or adjustable-rate is right for you, it’s important to know the details about both so you can feel confident in your home buying decision.

Fixed-Rate Mortgage

With a fixed-rate loan, your interest rate will never change over the life of your loan (unless you decide to refinance at a later date). Fixed-rate options are available for numerous types of loans, including conventional, FHA, VA, and USDA. Here’s how it works:

  • Like your rate, your monthly payment will never change
  • Lower payments available for longer loan terms
  • Various down payment options and assistance programs1, which offer 3% down or up to 100% financing
  • Your interest payments could be tax-deductible2
  • 15 or 30-year options

What About an Adjustable-Rate Mortgage (ARM)?

An ARM is an alternative to a fixed-rate home loan that offers an “introductory” interest rate set lower than that for conventional loans. The loan progresses at this rate for an agreed-upon period of time, usually several years. Once the introductory period expires, the interest rate “resets” — moves up or down in line with the movement of an “index” (currently the SOFR). Following this movement, the amount of interest you pay each month gets larger or smaller.

The advantages of an ARM include:

  • Lower starting interest rate
  • Lower starting monthly payment
  • Ability to afford more house

How do you know if a fixed-rate or adjustable-rate is right for you? The perfect place to start is with our Fixed vs Adjustable Mortgage Calculator. You can run some numbers for yourself to get an idea of what fits you best.

1Certain restrictions apply. Not available in all areas. Please contact your PrimeLending loan officer for more details.

2PrimeLending is not authorized to give tax advice. Please consult your tax adviser for tax advice for your specific situation.