10/1 and 10/6 ARM vs. 30-year fixed-rate mortgages

How to choose the mortgage term best suited to your finances

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When you’re purchasing a home, you’ll likely have the option of two types of mortgages: fixed-rate and adjustable-rate.

An adjustable-rate mortgage (ARM) has a fixed interest rate for a set amount of time before the rates can go up or down, affecting your monthly mortgage payments. A fixed-rate mortgage means you pay the same interest rate and have the same monthly payment for the duration of the loan.

Key insights

A 10/1 or 10/6 ARM will have a set interest rate for the first 10 years, then will change annually or every six months.

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A 30-year fixed mortgage has an interest rate that won't change.

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The starting interest rates on ARMs are typically lower than on fixed-rate mortgages.

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Which is best for you depends on your financial situation, short and long-term plans and risk tolerance.

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Understanding 10/1 and 10/6 ARMs vs. 30-year fixed mortgages

A fixed-rate mortgage is exactly what it sounds like: The interest rate is fixed and won’t change for the life of the loan. That means, for a 30-year fixed-rate mortgage, you’ll have a secure interest rate for 30 years and don’t need to budget for your mortgage payments changing.

An ARM, on the other hand, has a variable rate. ARMs are typically presented as two numbers. The first number in an ARM represents the amount of time the fixed interest rate is set for, and the second number determines how frequently the interest rate is subject to change. For example:

  • A 10/1 ARM has a mortgage with a fixed interest rate for the first 10 years, and then the interest rate fluctuates annually.
  • A 10/6 ARM is also 10 years of a stable rate and then the interest can go up or down every six months.

"For the first 10 years, either of these options is identical to a 30-year fixed," said Melissa Cohn, regional vice president at William Raveis Mortgage. "Only at the end of the 10 years can the rate adjust and be subject to an increase based on where the index (T-bill or SFR ) is at the time."

Calculate the highest possible interest rate and possible mortgage payment you could incur to see if this type of mortgage is right for you.

» MORE: What are interest-only mortgages?

Comparing a 10/1 or 10/6 ARM with a 30-year fixed mortgage

Homebuyers who want to save on interest rates may prefer an ARM because they typically have a lower starting rate than a fixed-year mortgage.

However, because interest rates are dependent on the current market and you can't predict what it will be when your set period ends, there is a risk that you could pay a higher interest rate on your mortgage later on.

"If we are in another inflationary time period, it is very possible that the rate on the adjustables will increase at the end of the 10 years, but it is also just as possible that the rate could be lower," said Cohn. "It is impossible to predict where rates and the economy will be in 10 years."

As such, you need to know your risk level and what your short- and long-term goals are for the home. For example, maybe you plan to sell or refinance before the fixed rate ends.

"If you think you will sell or refinance within the 10 years, there is no real risk — it is just in year 11 that the risks can happen," said Cohn.

However, you also need to consider your future income if you plan to refinance. "If your income changes, you may no longer qualify and be subject to the potential for a higher rate and payment in 11 years," said Cohn.

If you prefer stability and consistency and knowing that your mortgage payment will remain the same throughout the duration of the loan, a 30-year fixed-rate mortgage may be a better choice.

"With a 30-year fixed, there is no rate risk — the rate can never change over the life of the loan," said Cohn.

But keep in mind that even if market rates go down in the future, the rate will stay the same with a fixed-rate mortgage. If you buy during a high-rate period, you may be stuck with a high rate for 30 years, regardless of the market.

» MORE: What is a mortgage rate buy-down?

Pros and cons of a 10/1 or 10/6 ARM

Before deciding on a 10/1 or 10/6 ARM, there are a few advantages and disadvantages to consider.


  • Lower interest rates during the set period compared to a fixed-rate mortgage
  • Lower monthly mortgage payments during the first decade
  • Ideal for people who know they’ll sell or refinance before the fixed-rate period ends


  • Rates can increase after the fixed period is over, impacting your monthly payments
  • ARMs can have complicated rules — a borrower who doesn't understand the fine print could face penalties or fees
  • Borrowers need to be comfortable with risk and unpredictability
  • Closing costs and fees for refinancing an ARM to a fixed-rate mortgage may not be worth the savings in interest

» COMPARE: Best mortgage lenders

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    Can I refinance my 10/1 or 10/6 ARM into a 30-year fixed-rate mortgage?

    Yes, it's possible to refinance a 10/1 or 10/6 ARM into a fixed-rate mortgage. Be prepared to pay closing costs when refinancing.

    Can I convert my 10/1 or 10/6 ARM to a fixed-rate mortgage without refinancing?

    No, refinancing is necessary to convert an ARM to a fixed-rate mortgage.

    What happens if I want to sell my home before the fixed-rate period ends on my 10/1 or 10/6 ARM?

    If you want to sell your home before the fixed-rate period ends on your 10/1 or 10/6 ARM, you may incur prepayment penalties.

    Bottom line

    Before deciding on the type of mortgage that is best for you, assess your financial situation, risk level and future goals.

    If the property you purchase is where you plan to live long-term, a fixed mortgage provides stability and predictability. Or, if you think you'll sell the home in a specific time frame, opting for an ARM may help you save on interest rates.

    Article sources
    ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:
    1. Consumer Finance Protection Bureau, “What is the difference between a fixed-rate and adjustable-rate mortgage (ARM) loan?" Accessed Feb. 28, 2024.
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