With 30-year fixed rates at 6.46% and 7/1 ARMs at 6.02%, adjustable-rate mortgages are 0.44 percentage points cheaper in May 2026. That spread is meaningful — but narrower than the 0.7-1.0% typical in previous cycles.
Current ARM vs fixed rates
| Loan type | Rate (May 2026) |
|---|---|
| 30-year fixed | 6.46% |
| 15-year fixed | 5.72% |
| 7/1 ARM | 6.02% |
| 5/1 ARM | 6.41% |
4 scenarios head-to-head
Scenario 1 — Selling in 5-7 years: ARM wins. A 7/1 ARM saves $86/month vs the 30-year fixed on a $350,000 loan — $7,200 over 7 years without ever hitting the adjustment period.
Scenario 2 — Staying 10+ years: Fixed wins. After year 7, your ARM adjusts annually based on SOFR (~4.3%) plus a margin of 2.5-3.0%, potentially pushing your rate to 6.8-7.3%+.
Scenario 3 — Rates fall to 5.5% by 2027: ARM bridge strategy. Take the 7/1 ARM now at 6.02%, save $86/month. If rates fall to 5.5% by 2027, refinance into a 30-year fixed before your first adjustment.
Scenario 4 — Need to qualify for a larger loan: ARM helps. Lenders qualify ARM borrowers at the initial rate, potentially allowing a $30,000-$50,000 larger purchase price.
Worst-case ARM scenario: On a $350,000 7/1 ARM with a 5/2/5 cap structure, your rate could jump to 11.02% after year 7, raising your monthly payment from $2,101 to $3,325.
Our verdict for May 2026
Choose the 7/1 ARM if you plan to sell or refinance within 7 years. Choose the 30-year fixed if you are staying long-term and value payment certainty.
Model your scenario with our Mortgage Calculator.