Loan types
6 min read
Fixed or adjustable: how to compare the two
What changes and what stays the same, and the questions to ask before choosing an adjustable rate.
The main difference between a fixed-rate and an adjustable-rate loan is what happens to the interest rate after you close.
How a fixed rate works
A fixed-rate loan keeps the same rate for the full term, so your principal and interest payment never changes. That makes it easy to plan around, which is why many buyers choose it.
How an adjustable rate works
An adjustable-rate loan starts with a fixed period, such as five years, and then the rate can change at set intervals. The starting rate may be lower than a comparable fixed rate, but the payment can rise later.
Before you compare, ask how often the rate can change, how far it can move in one step and over the life of the loan, and what your payment would be at the highest possible rate. If you could not afford that payment, an adjustable loan may carry more risk than you want.
Rates shown on this site are illustrative and are not a rate quote or an offer to lend.
Rates and figures are illustrative, not a rate quote, loan offer or commitment to lend. A pre-approval is not a commitment to lend.
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