Adjustable Rate Mortgage (ARM) Calculator
ARMs start with a lower rate — but it can go up. See your worst-case scenario.
Initial Monthly Payment
$1,816.92
First 5 years at 5.5%
Rate Adjustment Scenarios
💡 Plain English: A 5/1 ARM starts at 5.5% — lower than a fixed rate. But after 5 years, the rate can adjust annually. In the worst case, it could climb to 10.5% ($3,021.38/mo). That's $1,204.46 more per month. ARMs are smart if you plan to sell or refinance before the fixed period ends. Risky if you plan to stay long-term.
About the Adjustable Rate Mortgage (ARM) Calculator
An adjustable-rate mortgage (ARM) has an interest rate that changes over time, unlike a fixed-rate mortgage. ARMs usually start with a lower introductory rate, then adjust up or down based on a market index — which makes your future payments less predictable.
How this calculator works
Enter your loan amount, introductory rate, fixed period, adjustment cap, and maximum rate. The calculator estimates your initial payment and the worst-case payment if the rate rises to its cap.
The math, in plain English
Initial payment uses the amortization formula at the intro rate. After the fixed period, the rate adjusts periodically (e.g., yearly) based on an index plus a margin, subject to periodic and lifetime caps.
Key terms
- •Introductory rate — the initial fixed rate, often lower than market fixed rates
- •Adjustment cap — the max a rate can change at each adjustment period
- •Lifetime cap — the maximum rate allowed over the life of the loan
Tips & things to know
- ✓ARMs make sense if you plan to move or refinance before the rate adjusts.
- ✓Always model the worst-case payment to ensure you can afford it if rates rise.
- ✓Ask about the index and margin — together they determine your future rate.
Frequently asked questions
Are ARMs risky?+
They can be. If rates rise, your payment can increase sharply after the fixed period. They suit borrowers who expect to sell or refinance before adjustments begin.
What does 5/1 ARM mean?+
The rate is fixed for the first 5 years, then adjusts once per year thereafter based on market conditions.
This calculator is for educational purposes only and uses estimates. Always consult a licensed mortgage professional for advice specific to your situation.