10/1 or 10/6 ARM vs. 30-year fixed-rate mortgage

Key takeaways

With a 10/1 or 10/6 ARM, you’ll have a fluctuating interest rate after a set introductory period. With a 30-year fixed-rate mortgage, the rate never changes.
For the first decade, ARMs typically offer a lower interest rate than 30-year fixed-rate mortgages.
If you’ll benefit from an initial lower interest rate and plan to sell or refinance within the first 10 years, a 10/1 or 10/6 ARM might be the right choice for you over a 30-year fixed-rate mortgage.

Adjustable-rate mortgages, including the 10/1 ARM and the 10/6 ARM, are common options in addition to the traditional 30-year fixed-rate mortgage. ARM and fixed-rate mortgage interest rates are directly tied to the economy, but there are key differences between these options. Here’s how to know which loan type might work best for you.

Contents

Key takeaways Differences between a 10/1 or 10/6 ARM and a 30-year fixed-rate mortgage Example of a 10/1 ARM vs. 30-year fixed mortgage Example of a 10/6 ARM vs. 30-year fixed mortgage ARM or fixed-rate calculator What to consider with a 10/1 ARM vs. 30-year fixed Is a 10/1 or 10/6 ARM a good idea?10/1 or 10/6 ARM vs. 30-year fixed-rate mortgage FAQ

Differences between a 10/1 or 10/6 ARM and a 30-year fixed-rate mortgage

Both types of ARMs (the 10/1 and the 10/6) and the 30-year fixed mortgage are loans with 30-year terms, but their interest rate structures are different. Here’s an overview of how the three compare:

	10/1 ARM	10/6 ARM	30-year fixed-rate mortgage
Loan term	30 years	30 years	30 years
Fixed-rate interest period	First 10 years	First 10 years	Full loan term
Rate adjustment frequency	Every year	Every six months	Never
Who it’s best for	People who plan on selling or refinancing within the first 10 years	People who plan on selling or refinancing within the first 10 years	Borrowers who want a predictable monthly payment for the entire loan term

The key difference between these loans lies in how often their interest rates change. In a 30-year fixed-rate mortgage, the interest rate is set at the beginning of the loan term and never changes.

For the first 10 years, the interest rate on a 10/6 or 10/1 ARM stays the same every month, just like a fixed-rate mortgage. But after that decade ends, it becomes a variable rate and continues to be so until the end of the mortgage term. With a 10/1 ARM, the interest rate adjusts every year. With a 10/6 ARM, the interest rate adjusts every six months.

So, let’s say you close your ARM loan on December 30, 2025. On December 30, 2035, your interest rate will change — moving either up or down based on movement in the index the rate is tied to.

The rate on the ARM will adjust again annually or biannually until you pay off the loan, sell the home or refinance the mortgage. Each time the rate changes, your monthly payment amount changes to reflect the difference in interest. Generally, there are caps on how much the interest rate can change within the designated period and over the lifetime of the loan.

10/1 ARM vs. 10-year fixed mortgage

Don’t confuse a 10/1 ARM with a 10-year fixed-rate mortgage. A 10/1 ARM is a 30-year mortgage with a 10-year introductory rate period; the rate then adjusts annually. A 10-year fixed-rate mortgage is a fixed-rate loan with a term of only a decade. That means your monthly payment will be much larger with the 10-year fixed-rate mortgage because you’re paying off the loan in 10 years instead of 30. While your payment will be larger, the upside is you’ll pay off your mortgage much faster, and you’ll pay less total interest.

Learn more: Fixed vs. adjustable-rate mortgages (ARM): What’s the difference?

Example of a 10/1 ARM vs. 30-year fixed mortgage

Let’s compare the costs of a 10/1 ARM with a 30-year fixed-rate mortgage. For this example, we’ll use a loan of $350,000 with a rate of 6.49 percent for the ARM and 6.99 percent for the 30-year fixed. Here’s a glimpse at how the first 10 years would look:

	10/1 ARM	30-year fixed-rate mortgage
APR	6.49%	6.99%
Monthly payment	$2,209.94	$2,326.21
Remaining principal after 10 years	$296,641.39	$300,272.48

Over the first 10 years, the 10/1 ARM is a clear winner: You save more than $100 per month to free up additional room in your budget, and you make a bigger dent in the principal balance.

Once the introductory period is over, though, things get riskier. Let’s say your ARM has a lifetime cap of 11.49 percent (a maximum increase of 5 percent). If the benchmark rate has risen to your cap (or higher), your payment would be $3,135.15. In contrast, those with a fixed rate would maintain the same payment of $2,326.21.

Example of a 10/6 ARM vs. 30-year fixed mortgage

Now, let’s look at the costs of a 10/6 ARM versus a 30-year fixed-rate mortgage, using the same numbers from the last example. Here’s how the loans compare during the first 10 years:

	10/6 ARM	30-year fixed-rate mortgage
APR	6.49%	6.99%
Monthly payment	$2,209.94	$2,326.21
Remaining principal after 10 years	$296,641.39	$300,272.48

Just like in the previous example, if you choose the 10/6 ARM over the 30-year fixed mortgage, you’d spend less on mortgage payments in the first 10 years. After that, the rate on a 10/6 ARM will adjust every six months — and if it increases, so will your payment.

For example, let’s say your rate goes up to 8 percent after a few years. In that case, your payment would increase to $2,568.18 — and if your rate continues rising, you’ll pay even more. But with a 30-year fixed-rate mortgage, the monthly payment will always be $2,326.21.

ARM or fixed-rate calculator

Use our ARM or fixed-rate calculator to make comparisons using your own information.

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What to consider with a 10/1 ARM vs. 30-year fixed

If you’re comparing a 10/1 ARM vs. a 30-year fixed-rate mortgage, consider the following questions:

How much are you saving? The big reason to consider a 10/1 ARM is the potential for a lower minimum monthly payment. So, do the math to determine whether the savings now are worth the potential uncertainty in the future.
What is your plan for the extra money you might save with an ARM? Make a plan for how you’ll make the most of your savings. Will you make additional payments to the principal to accumulate equity faster? Or can you use the money to pay off debt or put it toward your retirement?
How long are you planning to be in the home? If this home is a starter home, a 10/1 ARM can be a wise choice. By selling the property in the first 10 years, you’ll never even have to worry about what an interest rate adjustment means for your budget.
Can you afford the worst-case scenario? Even if you have plans to sell the home before the 10-year marker arrives, your plans might change. What will you do if you can’t sell the home or you’re unable to score a lower refinance rate? While it’s impossible to predict the future, you should be prepared to be able to pay a higher rate.

Is a 10/1 or 10/6 ARM a good idea?

ARM rates look more attractive because they are usually lower than those attached to 30-year fixed-rate mortgages. However, fixed-rate mortgages come with a rate that always stays the same. By locking in your rate, your monthly payment stays the same, too. That means less uncertainty about your loan cost over time and easier budgeting.

Choosing between an ARM or a fixed-rate mortgage involves considering your finances and plans for the property. Here’s how to decide which option is best for you:

10/1 or 10/6 ARM: If you can get a lower interest rate and plan to refinance or sell within a decade, a 10/1 or 10/6 ARM can be a smart move.
30-year fixed-rate mortgage: However, if you plan to own the property long term, a fixed-rate mortgage may make more sense.

Learn more: Refinancing your ARM into a fixed-rate mortgage

10/1 or 10/6 ARM vs. 30-year fixed-rate mortgage FAQ

Which option generally has a lower initial interest rate, a 10/1 ARM or a 30-year fixed-rate mortgage?

A 10/1 ARM often has a lower initial interest rate compared to a 30-year fixed-rate mortgage, generally about 0.25 to 0.5 percent less. The initial rate of a 10/1 ARM is typically set below current market rates, which makes it an appealing choice in a high-interest rate environment. However, this lower rate only lasts for the first 10 years before it starts adjusting annually based on the prevailing market conditions.

Also, while there’s a discount on the interest rates, the fees and closing costs can actually make the ARM more expensive than the 30-year loan. For example, in Bankrate’s survey of lenders, as of July 2025, the average interest rate on a 10/1 ARM is 6.50 percent — compared to 6.77 percent for the average 30-year fixed-rate mortgage. If you’re after a lower interest rate, consider a shorter-term fixed-rate mortgage, like a 10- or 15-year loan. These loans often offer not only a better rate but also reduced costs than a 10/1 ARM.
What happens if I plan to sell or refinance before the initial fixed-rate period ends on a 10/1 ARM?

If you plan to sell or refinance your home before the initial fixed-rate period ends on a 10/1 ARM, you may be subject to prepayment penalties. A hard prepayment penalty will penalize you for selling or refinancing your home during a prescribed period (usually the first few years of the loan term), while a soft prepayment penalty allows you to sell your home freely but penalizes refinancing the mortgage.

Additionally, refinancing your mortgage comes with closing costs, typically ranging from 2 percent to 5 percent of the loan amount.
What is the downside to getting an ARM?

Like any other type of home loan, ARMs have pros and cons. One of the main drawbacks is that ARMs are less predictable than fixed-rate mortgages — and if interest rates rise, your monthly payment will increase. Even though you can save on interest during the initial fixed-rate period, an ARM could cost you more in the long run if you don’t refinance or sell your home.