10/1 ARM vs. 30-Year Fixed Mortgage: What’s the Difference?

What Is a 10/1 ARM?

A 10/1 ARM is a type of adjustable-rate mortgage. As with other types of ARMs, the first number tells you the length of the initial fixed-rate period. The second number represents how often the rate will be adjusted after that—in this case, once every 12 months. Similarly, a 10/6 ARM would adjust every six months.

When your term begins, your loan will have a fixed interest rate for the first 10 years. The main benefit is that this initial rate will likely be lower than what you'd pay with a fixed-rate mortgage. Once the introductory period ends, the rate will be recalculated once a year for the remainder of the loan term. As a result, your rate and monthly payment could move up and down annually.

Learn more: Common Types of Adjustable-Rate Mortgages

What Is a 30-Year Fixed Mortgage?

A 30-year fixed mortgage is a home loan that has a fixed interest rate for 30 years. That means your rate won't change for the entire loan term. Because your rate will never change, your monthly payment will also remain steady. (However, it could go up if you pay your homeowners insurance premiums or property taxes through an escrow account and those expenses increase.)

Thirty-year fixed-rate mortgages are the most popular type of home loan. According to the Federal Reserve Bank of St. Louis, 92% of U.S. mortgages have fixed interest rates.

10/1 ARM vs. 30-Year Fixed Mortgage

A 10/1 ARM isn't necessarily better or worse than a 30-year fixed mortgage—they're simply two different types of home loans. Below are the main factors that distinguish one from the other.

Introductory Rate

• 10/1 ARM: You can expect a lower interest rate during the 10-year introductory period. As of April 2025, some rates are as low as 6.75%.
• 30-year fixed mortgage: These types of mortgages don't have introductory rates. Instead, the rate will remain the same for the duration of the loan term. As of April 2025, the average rate for a 30-year fixed mortgage is 6.83%.

Rate Stability

• 10/1 ARM: Your rate will remain fixed for the first 10 years of your loan term. After that, you'll need to prepare for annual rate adjustments. Your new rate will be calculated based primarily on whichever benchmark index rate your lender uses.
• 30-year fixed mortgage: You'll never have to worry about rate fluctuations because your rate will remain locked for the life of the loan.

Adjustment Period

• 10/1 ARM: After the 10-year introductory period expires, adjustments will occur annually until the mortgage is paid off.
• 30-year fixed mortgage: There are no adjustment periods with fixed-rate mortgages, whether the loan term is 30 years or 15 years.

Rate Caps

• 10/1 ARM: ARMs have three main rate caps that limit how much your rate can increase.
  

  Type of Rate Cap	When It Applies	Typical Rate Cap Amount
  Initial adjustment cap	During the first adjustment period	2% or 5%
  Periodic adjustment cap	During each subsequent rate adjustment	1% or 2%
  Lifetime cap	During the entire loan term	5%

• 30-year fixed mortgage: Since the interest rate is fixed, there are no rate caps or adjustment periods.

Monthly Payments

• 10/1 ARM: Rate adjustments could push your monthly payment up or down, depending on mortgage rate trends and your lender's ARM margin.
• 30-year fixed mortgage: Your principal amount due (plus interest) will remain the same for the whole loan term. The only way your payment could potentially increase is if there's a change in your homeowners insurance premium or property tax bill—and these bills are rolled into your monthly mortgage payment.

Loan Term

• 10/1 ARM: Most ARMs have 30-year loan terms, though some last for 15 years.
• 30-year fixed mortgage: The loan term will last for 30 years, but it's worth noting that a 15-year fixed mortgage is another option.

Should You Get a 10/1 ARM or a 30-Year Fixed Mortgage?

Every mortgage has its benefits and potential drawbacks. Having said that, here are some scenarios to consider before making a decision.

When to Consider a 10/1 ARM

• You plan to move or refinance within 10 years. If you only see yourself in the home short term, you could secure a lower-than-average interest rate and save money while you're there. You also have the option to refinance when the introductory period ends, though this typically costs 2% to 6% of the loan amount.
• You expect rates to stay low (or drop). An ARM allows you to take advantage of declining interest rates, which could save you a significant amount of money in the long run. The caveat is that it's impossible to predict how rates will change over the next decade.
• You anticipate having more income in the future. You might be on a career path that will lead to higher earnings down the road. If your rate fluctuates after the initial 10-year period, you may have room in your budget to cover the cost.

When to Consider a 30-Year Fixed Mortgage

• You have long-term plans to stay in the home. If this house feels like your forever home, going with a 30-year fixed mortgage could lead to the biggest savings—especially if rates are at a low point when you make the purchase.
• You want predictable payments. The built-in unpredictability of an ARM might make you uneasy. With a fixed-rate mortgage, you're in store for steady monthly payments that won't change over time.
• Interest rates are expected to rise. A fixed-rate mortgage can protect you from future rate hikes. If rates swing upward, it won't affect your mortgage or monthly payment. And if rates fall in the future, you still have the option to refinance.

Learn more: What Type of Mortgage Loan Is Best?

How to Get a Mortgage

Choosing the mortgage that's right for you is only one part of the homebuying journey. Preparing to buy a home also includes these key steps:

• Check your credit. The minimum credit score for a mortgage depends largely on the loan type, but you'll likely need a score of 620 or higher to qualify for a conventional loan. Your debt-to-income ratio, or the percentage of your monthly income that goes to making debt payments, is another important factor that lenders consider.
• Save for your down payment and closing costs. It's possible to get approved for a conventional mortgage with a down payment of just 3%. On top of that, you'll also need to save roughly 2% to 5% of the sale price to cover closing costs.
• Get preapproved. During a mortgage preapproval, the lender will review your financial information and run a credit check. Once you're preapproved, you'll receive a letter with your estimated loan amount and interest rate. That can help you determine how much home you can afford before you make an offer.
• Apply for your mortgage. After comparing quotes from multiple mortgage lenders, you can choose the right one for you and officially apply for your home loan. You'll then go through the mortgage underwriting process and schedule a home appraisal before getting approved. If all goes well, you'll pay your closing costs and move into your new home.

Learn more: The Complete Guide on How to Get a Mortgage

The Bottom Line

You may not have control over interest rates and home prices, but as a homebuyer, you do get to decide which type of mortgage works best for you. That might be a 10/1 ARM, a 30-year fixed mortgage or another option. You'll want to consider your budget and long-term plans before making a final decision.

No matter what you choose, your credit score will likely be a key factor that mortgage lenders consider when determining your eligibility and interest rate. You can check your FICO^® Score^☉ and credit report for free from Experian to see where you stand.