By David Parks · eXp Realty · The Apollo Group · 2 min read
A fixed-rate mortgage keeps the same rate for the life of the loan, while an adjustable-rate mortgage (ARM) starts with a fixed period and then adjusts. The right choice depends on how long you expect to stay and your risk comfort.
Your principal and interest payment stays the same, which makes budgeting easier. Common terms are 15 and 30 years.
An ARM such as a 5/1 or 7/1 has a fixed rate for the first five or seven years, then adjusts periodically based on an index. Rate caps limit how much it can change.
If you plan to sell or refinance before the adjustment period, an ARM may offer a lower starting rate. It carries the risk that you may not be able to sell or refinance as planned.
| Fixed-rate | Adjustable-rate (ARM) | |
|---|---|---|
| Rate | Same for the life of the loan | Fixed at first, then adjusts |
| Payment | Predictable | Can change after the fixed period |
| Starting rate | Often higher | Often lower |
| Often fits | Long stays and budget certainty | Shorter timelines, or plans to sell or refinance |
Ask about initial rate, adjustment frequency, caps, and the maximum possible payment. Compare these to a fixed-rate option.
Choose the loan that fits your timeline and budget under different scenarios. A lender can show payment examples side by side.
This article is general information, not legal, tax, financial or inspection advice. Every home and situation is different, so confirm details with a licensed inspector, lender, attorney or tax professional.
David is a Greater Denver real estate advisor with eXp Realty and The Apollo Group (Colorado broker license FA100103211). He has closed more than $55 million in volume, earned eXp Icon status in 2025, and holds a 5.0 rating on Zillow from 27 verified reviews.
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