ARM vs Fixed-Rate Mortgage 2026 — Decision Guide + Interactive Comparison
Adjustable-rate mortgages hit 21% market share in 2026 — the highest level in three years. Q2 2026 spreads: 5/6 ARM at ~5.30% vs 30-year fixed at ~6.23% (90 bps gap = $1,180/month savings on $720K California loan). Independent decision matrix + interactive payment calculator.
Sources: Freddie Mac PMMS weekly survey, Mortgage Bankers Association (MBA) origination data, Federal Reserve H.8 lending statistics. Updated April 2026.
TL;DR Decision Framework
- Sell or refi within 5 years? ARM 5/6 wins (90 bps savings × 5 years = $20-50K saved on typical loan)
- Plan to stay 5-10 years? 7/6 ARM matches; rate caps protect after year 7
- Plan to stay 10+ years? 30Y Fixed wins for predictability
- Income volatility? Always 30Y Fixed — payment certainty matters more than 90 bps
- Loan over $500K? ARM worth running the math (savings scale with loan size)
- Believe rates falling? ARM lets you benefit during fixed period AND refi later
Interactive Payment Calculator
Capped at initial + lifetime cap (typically +5%)
ARM Monthly
$2,777
During 5-year fixed period
Fixed Monthly
$3,072
For full 30 years
ARM Savings/Month
$296
Annual: $3,547
Cumulative Savings (ARM vs Fixed) at Each Year
| Year | ARM Cumulative Paid | Fixed Cumulative Paid | ARM Savings (or Cost) |
|---|---|---|---|
| Year 3 | $99,955 | $110,595 | $10,640 |
| Year 5 | $166,591 | $184,325 | $17,734 |
| Year 7 | $250,836 | $258,055 | $7,219 |
| Year 10 | $377,204 | $368,650 | $-8,554 |
| Year 15 | $587,816 | $552,975 | $-34,841 |
| Year 20 | $798,429 | $737,300 | $-61,128 |
| Year 25 | $1,009,041 | $921,626 | $-87,416 |
| Year 30 | $1,219,654 | $1,105,951 | $-113,703 |
Highlighted row = your expected tenure year. ARM payment after fixed period assumes the rate-after-reset input.
ARM Adoption by State (Q1 2026)
| State | ARM Market Share | Median Loan Size | 5/6 ARM Monthly Savings (typical) |
|---|---|---|---|
| Hawaii | 32% | $690,000 | $1,130 |
| California | 31% | $720,000 | $1,180 |
| New York | 28% | $580,000 | $950 |
| Massachusetts | 26% | $540,000 | $885 |
| Washington | 25% | $510,000 | $835 |
| Colorado | 22% | $470,000 | $770 |
| New Jersey | 20% | $440,000 | $720 |
| Florida | 18% | $380,000 | $622 |
| Texas | 15% | $340,000 | $557 |
| Ohio | 8% | $230,000 | $377 |
| Michigan | 7% | $220,000 | $360 |
| Indiana | 6% | $210,000 | $344 |
High-cost coastal states adopt ARMs more aggressively — savings on big loans justify the rate-reset risk.
11-Factor Decision Matrix
Plan to sell or refi within 5 years
ARM (5/6 strongly)Fixed-period rate captures 90 bps savings; rate reset never triggers
Plan to stay 5-10 years
ARM (7/6 or 10/6)Match ARM fixed period to expected tenure; pay 70-90 bps less for years you live there
Plan to stay 10+ years
30Y Fixed (with refi optionality)Rate uncertainty after fixed period; fixed locks the entire term
Income volatility / variable comp
30Y FixedPredictable payment matters more than 90 bps savings
Income highly stable + growing
ARMFuture income absorbs potential rate-shock impact
Believe rates falling 2026-2030
ARMFuture refi at lower rate AND benefit from lower initial during fixed period
Believe rates rising / sticky
30Y FixedLock now to avoid future rate shock; ARM rate caps trigger
Loan size > $500K
ARM (worth checking)90 bps on $500K = $4,500/yr; on $1M = $9,000/yr — meaningful enough to plan around
Loan size < $250K
30Y Fixed90 bps savings = ~$2,200/yr; not worth rate-shock risk for most buyers
Cash buffer 12+ months
Either OKRisk tolerance higher; can absorb potential reset payment increase
Cash buffer < 6 months
30Y FixedLimited buffer for payment shock if rates rise + life event
Related Tools
8 institutional forecasts; Fed path
Should I Buy 2026 Quiz7-question scored decision
Refinance CalculatorBreak-even on refi vs current loan
60+ Free Tools HubAll Amortio + cross-portfolio calculators
State Tax Migration Calculator (Levyio)If your tenure is short — relocate too?
Home Renovation ROI (Hammerio)Pre-sale equity boost