Adjustable-Rate Mortgage (ARM) Calculator
An ARM starts with a low fixed rate that later adjusts. See your initial payment and what it becomes once the rate resets.
How the adjustable-rate mortgage (arm) calculator works
An adjustable-rate mortgage holds one rate for an opening fixed stretch, then resets on a set schedule for the rest of the term. This tool amortizes the loan at the start rate through that fixed window, then recalculates each future payment as the rate moves.
At every reset it derives the new rate from the current index plus your fixed margin and recomputes the payment over the remaining balance and remaining months. Caps keep each move and the lifetime total inside defined limits, so you see a realistic payment path rather than a single flat number.
Worked example: with loan amount of $320,000, loan term (years) of 30 and initial rate of 5.50%, the adjustable rate mortgage (arm) calculator shows initial monthly payment of $1,816.92.
- Initial payment
- $1,816.92
- Payment after reset
- $2,186.48
- Balance at adjustment
- $295,874
- Rate change
- 5.50% → 7.50%
| Loan amount | Initial monthly payment |
|---|---|
| $200,000 | $1,135.58 |
| $320,000 | $1,816.92 |
| $500,000 | $2,838.95 |
| $750,000 | $4,258.42 |
The formula
Adjusted rate = index + margin, then constrained by the caps: the initial cap limits the first reset, the periodic cap limits each later reset, and the lifetime cap limits the total rise above the start rate. The payment re-amortizes the remaining balance at the capped rate over the months still left.
- The opening fixed period and reset frequency follow the loan structure, e.g. a 5/1 ARM fixes five years then adjusts annually.
- Caps are read as initial/periodic/lifetime, so 2/2/5 means a 2-point first move, 2-point later moves, and 5 points over the start rate.
- Future index values are assumptions you supply; nobody can forecast where SOFR or any benchmark actually lands.
- The margin is fixed for the life of the loan and added on top of whichever index value applies at each reset.
- Taxes, insurance, HOA dues, and lender fees sit outside the figures shown here.
Results are estimates for educational purposes and are not financial advice. Confirm exact figures with your lender or a licensed advisor.
Questions about the adjustable-rate mortgage (arm) calculator
What does the "1" mean in a 5/1 ARM versus the "6" in a 5/6 ARM?
The first number is the fixed period in years; the second is how often the rate adjusts afterward. A 5/1 ARM fixes the rate for five years, then resets once a year.
A 5/6 ARM also fixes five years but then resets every six months. Most newer SOFR-indexed loans use the 5/6, 7/6, and 10/6 pattern.
If my index drops at reset, will my payment definitely fall?
Usually yes, but not always. Your rate is the index plus a fixed margin, so a lower index pulls the rate down.
Some loans carry a rate floor that prevents the rate from dropping below a set level, and periodic caps limit how far it can fall in one step. Check your note for a floor before assuming every decline reaches your payment.
Can my balance grow on this kind of ARM?
Not on a standard fully amortizing ARM. Each payment here covers all the interest due plus principal, so the balance only falls. Balances grow only on payment-option ARMs, where choosing a minimum payment below the interest charge lets unpaid interest capitalize. Those are modeled by the option ARM calculator, not this one.
Is the Adjustable-Rate Mortgage (ARM) Calculator free to use?
Yes. Every calculator on MortgageLoansCalculator is completely free, with no sign-up, login or paywall. Run as many scenarios as you like.
How does an adjustable-rate mortgage work?
An ARM is fixed for an intro period — five years on a 5/1, seven on a 7/1 — then adjusts periodically to an index plus a fixed margin, within caps.
You get a lower starting rate in exchange for uncertainty once the fixed period ends.
What are ARM rate caps?
Caps limit how far the rate can move: an initial cap at the first reset, a periodic cap per adjustment, and a lifetime cap over the loan. Together they set your worst-case payment, which this calculator projects before you sign.
ARM vs. Fixed-Rate Mortgage
Compare an adjustable-rate mortgage against a fixed-rate loan across likely rate scenarios.
ARM & Interest-Only ARM vs. Fixed
Compare a standard ARM, an interest-only ARM and a fixed-rate mortgage side by side.
Interest-Only ARM Calculator
Model the interest-only period of an ARM and the payment shock when amortization begins.
Option ARM Calculator
See how minimum payments on an option ARM can cause negative amortization and a growing balance.
Fixed-Rate vs. Interest-Only Mortgage
Compare a conventional fixed-rate loan against an interest-only mortgage over time.
Fixed-Rate vs. LIBOR ARM
Compare a fixed-rate mortgage with an index-based ARM under rising and falling rate paths.