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Adjustable-Rate Mortgage (ARM) Calculator
Model an ARM end to end: intro payment, payment after the first adjustment, and worst-case payment at the lifetime rate cap. See the dollar jump for each scenario before locking the loan.
Intro payment
$2,518
first 5 years at 6.00%
After first adjustment
$3,147
8.50% expected rate
+$629 jump
At lifetime cap
$3,831
11.00% worst case
+$1,312 jump
Reading the number
Balance after the intro period: $390,828. The post-intro payment is computed by re-amortizing this balance at the new rate over the remaining term.
Most ARMs have rate caps: an initial cap (max change at first adjustment), a periodic cap (max change per adjustment), and a lifetime cap (max above the start rate). Always test against the lifetime cap, not just today's expected rate.
How to Use
- Enter the loan amount, total term, and intro fixed period (5/1, 7/1, 10/1 ARM, etc.).
- Enter the intro rate (today's locked rate for the fixed period).
- Enter your expected post-adjustment rate using current index + margin assumptions.
- Enter the lifetime cap (commonly intro + 5%) — this is the worst-case rate.
- Compare the three payments and decide whether you can absorb the lifetime cap scenario.
Frequently Asked Questions
How do ARM rate caps work?
Most ARMs have three caps: an initial cap (max change at first adjustment, often 2%), a periodic cap (max change per subsequent adjustment, often 2%), and a lifetime cap (max above the start rate, often 5%). The fully indexed rate at adjustment = current index + margin, but capped by all three.
Should I get an ARM or a fixed-rate mortgage?
ARMs typically price 0.25–0.75% below 30-year fixed. They make sense if you'll move, refinance, or pay off before the intro period ends, or if you can afford the lifetime cap payment without strain. Use a fixed when you want certainty for long horizons.
What's a 5/1 ARM vs 7/6 ARM?
5/1 = fixed 5 years, then adjusts every 1 year. 7/6 = fixed 7 years, then adjusts every 6 months. Modern ARMs commonly use SOFR-indexed 5/6, 7/6, or 10/6 structures. The first number is fixed years; the second is adjustment frequency.
Is there an interest-only ARM?
Yes — combination products exist with a 5- or 10-year IO period plus an adjustable rate. Use the interest-only calculator for the IO mechanics, then test the post-IO/post-adjustment payment with this ARM tool.
Related Calculators
ARM vs Fixed-Rate Calculator
Side-by-side ARM vs fixed for the same loan amount.
Mortgage Calculator
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Refinance Calculator
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Interest-Only Mortgage Calculator
Model an interest-only ARM combo product.
15-Year vs 30-Year Mortgage Calculator
Compare fixed-rate term options before considering an ARM.
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