Mortgage Calculators

Fixed Rate Mortgage vs. LIBOR ARM

Use this calculator to compare a fixed rate mortgage to a LIBOR ARM.

Inputs

Loan amount

Loan term (years)

Fixed rate

ARM initial rate

Index rate (e.g. SOFR)

Margin

ARM intro period (years)

Estimates only. Adjust any value to recalculate instantly.

Results

Fully-indexed ARM rate 7.25% index 4.50% + margin 2.75%

ARM initial payment $1,816.92

Fixed payment $2,075.51

ARM at fully-indexed rate $2,182.96

ARM lifetime interest $430,595 vs $427,185 fixed

Payment scenarios

ARM initial $1.8k
Fixed $2.1k
ARM fully-indexed $2.2k

Loan balance ARMFixed

An index-based ARM resets to the index plus a fixed margin — here 7.25% after the 5-year intro. The intro rate saves $258.59/mo, but over the full term the ARM's interest runs $3,410 higher than the fixed loan if the index holds.

Balance & cumulative interest by year (ARM resets to 7.25% at year 5)View table

Year	ARM balance	Fixed balance	ARM interest	Fixed interest
1	$315,689	$316,590	$17,492	$21,496
2	$311,135	$312,942	$34,742	$42,754
3	$306,325	$309,040	$51,734	$63,758
4	$301,243	$304,866	$68,455	$84,491
5	$295,874	$300,402	$84,889	$104,933
6	$291,519	$295,627	$106,197	$125,064
7	$286,837	$290,520	$127,179	$144,863
8	$281,805	$285,057	$147,810	$164,306
9	$276,395	$279,213	$168,063	$183,369
10	$270,580	$272,963	$187,911	$202,025
11	$264,329	$266,278	$207,323	$220,246
12	$257,609	$259,127	$226,266	$238,001
13	$250,385	$251,478	$244,706	$255,258
14	$242,621	$243,296	$262,605	$271,983
15	$234,274	$234,545	$279,921	$288,138
16	$225,301	$225,185	$296,611	$303,684
17	$215,656	$215,173	$312,629	$318,578
18	$205,288	$204,463	$327,924	$332,774
19	$194,142	$193,008	$342,442	$346,226
20	$182,162	$180,756	$356,125	$358,879
21	$169,283	$167,650	$368,909	$370,680
22	$155,439	$153,632	$380,728	$381,568
23	$140,557	$138,638	$391,509	$391,480
24	$124,559	$122,600	$401,175	$400,348
25	$107,363	$105,445	$409,642	$408,099
26	$88,877	$87,095	$416,819	$414,655
27	$69,006	$67,468	$422,611	$419,935
28	$47,645	$46,474	$426,913	$423,847
29	$24,683	$24,019	$429,615	$426,298
30	$0	$0	$430,595	$427,185

How the fixed rate mortgage vs. libor arm calculator works

It compares a fixed-rate payment with an index-based ARM, whose rate equals a market index (historically LIBOR, now usually SOFR) plus a fixed margin. It shows the initial ARM payment and the payment if the rate moves to the fully-indexed level.

Worked example

Worked example: with loan amount of $320,000, loan term (years) of 30 and fixed rate of 6.75%, the fixed rate mortgage vs libor arm shows fully-indexed arm rate of 7.25%.

ARM initial payment: $1,816.92
Fixed payment: $2,075.51
ARM at fully-indexed rate: $2,182.96
ARM lifetime interest: $430,595

The formula

Fully-indexed rate = index + margin. Payments for each scenario use P × r ÷ (1 − (1 + r)⁻ⁿ).

Results are estimates for educational purposes and are not financial advice. Confirm exact figures with your lender, plan administrator or advisor.

Frequently asked

Questions about the fixed rate mortgage vs. libor arm

What replaced LIBOR for ARMs?

LIBOR was phased out and most ARMs now use SOFR (the Secured Overnight Financing Rate) as their index. The mechanics — index plus margin — are the same.

What is the fully-indexed rate?

The index plus your loan’s margin — the rate your ARM moves toward at adjustment. Comparing it to the fixed rate shows your potential downside.

What is the margin?

A fixed percentage the lender adds to the index to set your ARM rate. Unlike the index, the margin does not change over the life of the loan.

Is the Fixed Rate Mortgage vs. LIBOR ARM free to use?

Yes. Every calculator on FinCalculators is completely free, with no sign-up, login or paywall. You can run as many scenarios as you like.

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