What’s the Difference Between a Fixed-Rate and an Adjustable-Rate Mortgage?

The main difference lies in how your interest rate changes over time. With a fixed-rate mortgage, your rate stays the same for the entire loan term — usually 15, 20, or 30 years — making it easy to plan your budget since your monthly payments remain consistent.

An adjustable-rate mortgage (ARM) starts with a lower initial rate for a fixed period (say, 5 or 7 years) and then adjusts periodically based on market conditions. While an ARM can offer short-term savings, it carries the risk of higher payments if rates rise.

In my experience, a fixed-rate loan is ideal for buyers planning to stay long-term, while ARMs can make sense for those expecting to relocate or refinance before the rate adjusts. The key is aligning your mortgage structure with your timeline and comfort level with risk.