ARM Calculator
Calculate adjustable rate mortgage payments and see how your payments may change when the interest rate adjusts. Compare ARM vs fixed-rate mortgage options.
Current Payment
Initial Rate:
0.00%
Monthly Payment:
$0.00
Loan Amount:
$0
First Adjustment
Year:
Year 0
New Rate:
0.00%
New Payment:
$0.00
Worst Case Scenario
Max Rate:
0.00%
Max Payment:
$0.00
Payment Increase:
$0.00
ARM Payment Schedule
Enter details and click "Calculate" to view ARM payment schedule
Understanding Adjustable Rate Mortgages
An Adjustable Rate Mortgage (ARM) has an interest rate that can change periodically, typically after an initial fixed-rate period. ARMs offer lower initial rates but carry the risk of payment increases.
How ARMs Work
- Initial Period: Fixed rate for 3, 5, 7, or 10 years
- Adjustments: Rate changes annually after initial period
- Index + Margin: New rate = current index rate + lender's margin
- Caps: Limits on how much and how often rates can change
- Reset Period: Usually adjusts annually (1-year ARM)
Common ARM Types
5/1 ARM
- 5 years fixed rate
- Adjusts annually after year 5
- Most popular ARM type
- Good for short-term ownership
7/1 ARM
- 7 years fixed rate
- Adjusts annually after year 7
- Longer fixed period
- Higher initial rate than 5/1
ARM Caps and Limits
- Initial Adjustment Cap: Limits first rate change (usually 2-5%)
- Periodic Adjustment Cap: Limits subsequent changes (usually 2%)
- Lifetime Cap: Maximum rate increase over loan life (usually 5-10%)
- Floor Rate: Minimum rate the ARM can adjust to
- Payment Cap: Some ARMs limit payment increases (not rate)
ARM vs Fixed-Rate Mortgage
ARM Advantages
- Lower initial interest rates
- Lower initial monthly payments
- Good for short-term ownership
- Can refinance before adjustments
ARM Risks
- Payments can increase significantly
- Rate uncertainty
- Potential payment shock
- Harder to budget long-term
Tip: ARMs are best for borrowers who plan to sell or refinance within the initial fixed-rate period. Consider your long-term plans and risk tolerance before choosing an ARM.