ARM vs. Fixed-Rate Mortgage: Differences and How to Choose in Texas

When you’re buying a home in Texas—whether in Dallas, Austin, Houston, or a fast-growing suburb—one of the biggest financial decisions you’ll make is choosing between an adjustable-rate mortgage (ARM) and a fixed-rate mortgage. Both loan types have unique advantages, and the right one depends on your goals, how long you plan to stay in the home, and your comfort level with risk.

At Dylken Home Loans, we help Texas homebuyers navigate these options so they can make smart, confident choices. Here’s what you need to know.

How a Fixed-Rate Mortgage Works

A fixed-rate mortgage is straightforward: your interest rate never changes for the entire life of the loan. That means your principal and interest payments stay consistent month after month.

For Texas homeowners, this stability can be especially valuable given fluctuations in property taxes and insurance costs. Even if local market rates climb, your mortgage rate—and monthly payment—remain locked in.

Most borrowers choose either a 15-year or 30-year fixed mortgage. While the 15-year option builds equity faster, the 30-year provides lower monthly payments, which can be appealing in high-cost housing markets like Austin or Plano.

How an Adjustable-Rate Mortgage (ARM) Works

An ARM starts with a lower introductory rate than a fixed mortgage, often making it attractive to first-time buyers or those looking to maximize affordability in the early years of ownership.

Here’s the tradeoff: after the initial fixed period (commonly 5, 7, or 10 years), your rate adjusts periodically based on market conditions. For example, a 5/6 ARM means your rate is fixed for five years, then adjusts every six months.

ARMs come with caps that limit how much your rate can increase at each adjustment and over the life of the loan. Still, there’s always the possibility that your payments could rise—sometimes significantly—once the introductory period ends.

Example: ARM vs. Fixed-Rate Mortgage in Texas

Let’s imagine you’re buying a $400,000 home in San Antonio.

• 5-year ARM
  
  
  
  • Starting rate: 6.25%
    
    
  • Monthly payment: about $2,460
    
    
  • After five years, the payment could reset higher (or lower), depending on the market.
    
    
• 30-year Fixed
  
  
  
  • Rate: 6.75%
    
    
  • Monthly payment: about $2,595
    
    
  • Payment never changes (except for taxes and insurance).
    
    

The ARM saves you money up front, but the fixed-rate gives you peace of mind long-term.

Who Should Consider an ARM?

• Buyers who don’t plan to stay in the home long-term (e.g., relocating for work in 5–7 years).
  
  
• Borrowers who want lower payments in the early years to free up cash flow.
  
  
• Homeowners confident they’ll refinance before the adjustment period.

Who Should Consider a Fixed-Rate Mortgage?

• Texans planning to stay in their home long-term.
  
  
• Buyers who value predictable monthly payments and stability.
  
  
• Families on a fixed budget who don’t want surprises down the road.

How to Decide Between ARM and Fixed

When choosing between these two loan types, ask yourself:

1. How long will I keep the home? If less than 10 years, an ARM might make sense. If longer, fixed is often safer.
   
   
2. Can I handle a potential payment increase? Run the numbers based on maximum adjustment caps.
   
   
3. What’s happening in the Texas housing market? In fast-appreciating areas, short-term ARMs can sometimes be strategic.
   
   

At Dylken Home Loans, we recommend comparing multiple loan scenarios side by side before deciding. That way, you can see not just today’s payment but also the long-term impact.

Bottom Line

There’s no one-size-fits-all answer. Both ARMs and fixed-rate mortgages can be smart choices depending on your timeline and financial comfort. The key is to match your loan with your life plans.

If you’re buying in Texas, our team at Dylken Home Loans can help you explore both options, run the numbers, and choose the path that sets you up for success.

Ready to see which loan fits your Texas homeownership goals? Contact us today for a personalized consultation.

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