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ARM vs Fixed Rate Calculator

Compare adjustable-rate and fixed-rate mortgage payments for a condo purchase.

By True Condo Cost editorial team · Editorial standards

Adjustable-rate mortgages can lower early payments but expose you to rate shocks. Fixed rates trade higher initial cost for predictability, which helps when HOA fees already move.

Model both paths using your expected hold period and rate scenarios.

Your numbers

What this means

Over 7 years, total P&I differs by $0 between these simplified ARM and fixed paths.

Assumptions and limitations

  • ARM modeled with one rate change after year 5; real ARMs have caps, indexes, and intervals.

Frequently asked questions

When is an ARM worth it?
Some buyers choose ARMs if they plan to sell or refinance before adjustments, especially when fixed rates are high.

Run these next

Most buyers model HOA, insurance, and assessments in separate passes.

ARMs and HOAs compound uncertainty

A 5/1 ARM starting 150 bps under fixed saves roughly $180/month on a $350K loan—but HOA dues rose 18% median in many 2024–2025 renewals while rates stayed elevated. Model ARM savings against HOA stress, not against static dues.

When ARM fits condo buyers

Short hold periods with known exit, high conviction on income growth, or plans to pay down principal before adjustment can justify ARM math. Long holds in buildings with reserve risk favor fixed payment certainty.

Arm Vs Fixed: one scenario to try

Inputs: $340,000 loan, 5/1 ARM at 5.75% vs fixed at 6.75%, $480 HOA → initial ARM saves about $195/month on PI; if HOA rises 12% in year two, part of that savings disappears even before the ARM adjusts.

Arm Vs Fixed: what stays off the spreadsheet

It does not forecast index rates after the fixed period on the ARM.

It does not model non-warrantable pricing or project litigation risk.

Last updated: June 2026

When to use this calculator

  • You are choosing between ARM and fixed on a condo purchase or refi
  • You have a short hold period and want initial payment savings
  • You want to see ARM savings against static HOA assumptions

Inputs you need

  • Loan amount, ARM start rate, fixed rate, and HOA
  • Expected hold period before adjustment

How to interpret the result

  • ARM savings shrink when HOA rises during the fixed period
  • Long holds in buildings with reserve risk often favor fixed certainty

What this calculator does not know

  • Live tax bills, insurance quotes, or HOA budgets from any database
  • Lender approval, HOA questionnaire results, or project eligibility
  • Future HOA increases unless you change the inputs yourself
  • Post-adjustment ARM index rates
  • Non-warrantable pricing overlays

Documents to verify before relying on the estimate

  • HOA budget and most recent financial statements
  • Reserve study and percent-funded summary
  • Master insurance declarations and renewal summary
  • County property tax estimate for the unit at your offer price
  • HO-6 insurance quote matched to master policy coverage

Educational estimates only. Confirm figures with association documents, county tax offices, and licensed professionals before you make an offer.

Frequently asked questions

When does an ARM make sense?
Some buyers choose ARMs if they plan to sell or refinance before adjustments, especially when fixed rates are high. Model your hold period explicitly.

Sources to verify before buying

Use this checklist during due diligence. Calculators help you plan; these documents tell you what a specific building actually costs.

  • HOA budget and audited financials (or reviewed statements if the association is small)
  • Reserve study with percent-funded and component schedules — often prepared under CAI / APRA standards
  • Master insurance declarations: carrier, deductible, wind/hail sublimits, and coinsurance
  • Board minutes covering the last two insurance renewals and any assessment votes
  • Written special assessment notices and payment plans
  • County assessor or municipal property tax estimator for the parcel (not a neighbor’s bill)
  • HO-6 quote aligned to master policy gaps — confirm with your state Department of Insurance licensed agent
  • Lender condo questionnaire or Fannie Mae / Freddie Mac project review status for warrantability

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