Adjustable-Rate Mortgage (ARM) Calculator
Project ARM payments after each rate reset using your caps, see the payment after the fixed period and the worst case the caps allow.
An adjustable-rate mortgage (ARM) has a fixed rate for an opening period of 3, 5, 7 or 10 years, then resets at regular intervals to a market index plus the lender's margin. Rate caps limit how far each reset can move. This calculator projects your payment after each reset and shows the worst case the caps allow, so you can check you could afford it.
How to use this tool
- Enter the loan amount, term and starting rate.
- Choose the fixed period and how often the rate adjusts afterwards — a 5/6 ARM resets every 6 months, a 5/1 every year.
- Enter the rate you expect after the fixed period: today's index plus your margin.
- Enter the caps from your loan estimate, such as 2/1/5, and read the payment path.
Formula
Payment = B × r ÷ (1 − (1 + r)^−m), recalculated at every reset
B is the balance at the reset, r the new monthly rate and m the months left. Each reset moves the rate toward your expected rate by no more than the first-adjustment cap (first reset) or the later cap (after that), and never above the start rate plus the lifetime cap.
Example
A $400,000, 30-year 5/6 ARM at 5.75% costs $2,334.29 a month for the first 60 months. If index plus margin is 7.25% at the first reset, the 2-point first cap allows the whole move and the payment rises to about $2,682 for the remaining 25 years. In the worst case the rate jumps 2 points, then 1 point every six months up to the 10.75% lifetime cap, and the payment peaks near $3,552.
Frequently asked questions
What do caps like 2/1/5 mean?
The first number limits the first adjustment (2 points), the second limits each later adjustment (1 point) and the third limits the total rise over the life of the loan (5 points above the start rate). A 5.75% loan with 2/1/5 caps can never go above 10.75%.
What is the difference between a 5/1 and a 5/6 ARM?
Both are fixed for five years. A 5/1 then adjusts once a year; a 5/6 adjusts every six months. Conforming SOFR ARM products commonly use six-month resets; check the exact index and adjustment dates in your loan documents.
Can the rate go down?
Yes, if the index falls. Caps usually limit decreases too, and many loans set a floor, often equal to the margin. Enter a lower expected rate to see the effect; this calculator does not apply a floor above 0%.
How do I choose the expected rate?
Find the index and margin in your loan estimate or note. Today's index plus the margin is a reasonable baseline; then try higher values to see what you could still afford.
Sources
This tool gives an estimate for general information only. It is not financial, tax, legal or medical advice — check with a qualified professional before you rely on the result.
Last updated: 2026-10-30