Buying a home comes with a big question: which loan type should you choose? The ARM vs. fixed rate mortgage debate is one of the most common decisions buyers face. Between a traditional 30-year fixed-rate loan, a 15-year ARM mortgage, and other options, it helps to understand the differences so you can match your financing to your long-term plans.

At NHC, we make this decision easier. On top of offering the lowest prices per square foot in new construction homes, our affordable homes mean you’ll be starting with a smaller loan, and that makes whichever mortgage you choose more manageable from day one.

In this guide, we’ll compare ARM vs. fixed-rate mortgages to help you better understand which option is right for you as you take the next steps toward becoming a homeowner. We’ll also break down how NHC is helping bring back affordable homes across the U.S.

Understanding Mortgage Options

Before choosing a loan, it’s helpful to know how each type works. Let’s break down the basics of ARMs vs. fixed-rate mortgages.

Understanding Mortgage Options

Before choosing a loan, it’s helpful to know how each type works. Let’s break down the basics of ARMs vs. fixed-rate mortgages.

What is an Adjustable Rate Mortgage (ARM)?

An ARM starts with a lower interest rate that remains fixed for an initial period—commonly 5, 7, or even 15 years. After that, the rate adjusts periodically based on market conditions. 

A 15-year ARM mortgage can keep payments lower for a long stretch before any changes occur, and when combined with NHC’s affordable pricing, it’s an even more budget-friendly option.

What is a Fixed-Rate Mortgage?

A fixed-rate mortgage, on the other hand, locks in your interest rate for the life of the loan. Whether you choose 15, 20, or 30 years, your monthly payments remain predictable no matter how the market shifts. And with our price-leading homes, those payments are often lower than rent.

Overview of Common Mortgage Terms

Terms like “adjustment period,” “rate caps,” and “loan-to-value ratio” often appear in loan documents. Understanding them helps you compare an ARM vs. a fixed-rate mortgage more confidently, and NHC’s financing team can walk you through every step.

Benefits of an Adjustable Rate Mortgage (ARM)

An ARM offers unique advantages that can make sense depending on your situation. Here’s what to keep in mind.

Lower Initial Interest Rates and Payments

One of the biggest perks of an ARM is its lower starting rate. Compared to a fixed-rate loan, you’ll likely enjoy smaller monthly payments upfront. 

Pair that with NHC’s already affordable home prices, and your early years of homeownership become especially manageable.

Ideal Situations for Choosing an ARM

An ARM can make sense if you plan to move within a few years, expect to refinance soon, or anticipate a higher income down the road. With NHC’s affordable entry pricing, it’s an attractive choice for first-time buyers who want to get into a new home quickly.

Risks and Volatility Explained

Because rates adjust over time, payments could increase. If market rates climb, your monthly costs may rise, which is something to weigh carefully when comparing an ARM vs. a fixed-rate mortgage. 

The good news? Starting with an NHC home means your base loan is smaller, which helps soften the impact of future adjustments.

Benefits of a Fixed-Rate Mortgage

If predictability is more important to you than flexibility, a fixed-rate loan may be the better option. Here’s why many homeowners choose it.

Predictable Monthly Payments

With a fixed-rate loan, your principal and interest never change. That consistency makes budgeting easier compared to the uncertainty of an ARM mortgage. And when those steady payments are tied to one of NHC’s affordably priced homes, you’ll find yourself with more breathing room each month.

Stability in Interest Rates

Fixed loans shield you from future market hikes. This is especially appealing when evaluating 30-year fixed mortgage rates vs ARM options. Plus, because NHC homes are priced below the market average, even a fixed rate feels surprisingly affordable.

Long-Term Financial Planning Advantages

For buyers planning to stay put, fixed-rate mortgages offer stability and reliable equity growth, which are especially powerful when your starting price is already lower. Affordable payments today build into long-term wealth tomorrow.

Who Should Choose an ARM vs. Who Should Choose a Fixed-Rate Mortgage: A Quick Side-by-Side

Different buyers have different needs. Here’s how to know which loan might be the better match for your situation.

Best Situations for an ARM

• First-time buyers looking to save in the early years
• Homeowners planning to move or upgrade within a decade
• Buyers expecting income increases in the near future

Best Situations for a Fixed-Rate Loan

• Long-term homeowners who want stability
• Conservative borrowers who prefer predictable costs
• Families planning to stay put and build equity steadily

Refinancing Your Mortgage: What to Know

Whether you choose an ARM or fixed loan, refinancing may come into play. Here’s what you should know about timing and benefits.

How Soon Can You Refinance a Mortgage?

No matter which side you choose in the ARM vs. fixed-rate mortgage debate, it’s important to understand when refinancing could become an option. In some cases, it could be as soon as you want. 

For example, if you lock in a 6.5% interest rate and they drop to 3% by the next day (unlikely), some lenders may allow you to refinance immediately. In other cases, lenders will likely want you to wait at least six months after getting your original mortgage to refinance.

Benefits of Refinancing an ARM Mortgage

Switching from an ARM to a fixed loan can protect you from rising rates, which is something that falls short with a fixed-rate mortgage.

Benefits of Refinancing a Fixed-Rate Mortgage

So, can you refinance a fixed-rate mortgage? Even if you start with a fixed loan, you can refinance if interest rates drop. Affordable pricing from NHC means you’ll have more flexibility to make the timing work for you.

Risks of Refinancing Too Soon

Closing costs, timing, and small rate drops can make refinancing less beneficial. For example, if rates have only dropped by .5% or so, it may not be in your best interest to refinance until they drop further. 

Regardless, though, with NHC’s low home prices and easy financing through NHC Mortgage, you may not need to worry about refinancing (let alone fixed-rate vs. ARM mortgages), as your monthly payments will be much more affordable. 

Why NHC’s Low Home Prices Matter

At the end of the day, your choice of mortgage is important, but it becomes a lot less stressful when the home itself is priced right. That’s where NHC stands out.

The Advantage of Lower Initial Loan Amounts

Lower prices mean smaller mortgages, and smaller mortgages mean lower monthly payments. That’s why choosing NHC makes any mortgage decision easier.

How Low Prices Affect ARM vs. Fixed-Rate Decisions

When comparing an ARM vs. a fixed-rate mortgage, your decision gets easier if your base loan is already thousands less than similar homes nearby.

Mortgage Calculator: Estimating Your Payments

Use our mortgage calculator to compare ARM and fixed-rate scenarios side by side. You’ll see how much affordability improves when your starting loan is smaller.

NHC Mortgage Financing Options

Our in-house financing team helps you take advantage of those savings with flexible mortgage choices. We also help you decide which loan options, like a zero-down home loan, could benefit you the most on top of our low prices.

NHC Makes Your Mortgage Decision Easier

Choosing between an ARM vs. a fixed-rate mortgage comes down to your timeline, risk comfort, and long-term plans. But what really tips the scales is starting with a home that’s already affordable, and that’s where NHC delivers.

Next Steps to Secure Your Affordable Home

Compare your financing options, run the numbers, and then find your NHC community

to lock in affordable homeownership today. 

Already know what community you’re looking for? Check out our wide range of floor plans, starting at just $75 per square foot.

Frequently Asked Questions

Can You Get Out of an ARM Loan Early?

You can get out of an ARM loan early through refinancing or selling before the adjustment period.

Is an ARM vs. Fixed-Rate Mortgage Better for You?

It depends on your timeline. ARMs help short-term buyers save upfront, while fixed loans work best for long-term stability. 

Do Fixed-Rate Mortgages Always Have Higher Interest Rates Initially?

Generally, fixed-rate mortgages have higher interest rates, which is why comparing fixed mortgage rates vs ARM loans is so important. 

Is Refinancing Worth the Closing Costs?

If rates drop significantly, refinancing can save thousands. If the drop is small, it may not be worth the added costs.