Adjustable Rate Mortgage Calculator
An ARM starts with a low fixed rate that later adjusts. See your initial payment and what it becomes once the rate resets.
A worked example
Running this tool on current national benchmarks (Federal Reserve / Freddie Mac via FRED (St. Louis Fed)) — swap in your own numbers to see how the result moves.
- Loan amount
- $320,000
- Loan term (years)
- 30
- Initial rate
- 5.50%
- Initial fixed period (years)
- 5
- Estimated rate after adjustment
- 7.50%
adjusts to $2,186.48 after 5 years
- Initial payment$1,816.92
- Payment after reset$2,186.48
- Balance at adjustment$295,874
How the initial monthly payment changes with loan amount
Holding the other inputs at the example above, here is how the result moves as loan amount changes.
| Loan amount | Initial monthly payment | Initial payment |
|---|---|---|
| $200,000 | $1,135.58 | $1,135.58 |
| $320,000 | $1,816.92 | $1,816.92 |
| $500,000 | $2,838.95 | $2,838.95 |
| $750,000 | $4,258.42 | $4,258.42 |
The math behind it
First the calculator amortizes your full loan at the initial rate over the whole term to get the starting monthly payment. It then rolls the balance forward to the end of the fixed period, and re-amortizes that remaining balance at your estimated post-adjustment rate over the years that are left. The two payments — before and after the reset — are what you see, along with the balance at the moment the rate changes.
Assumptions & limits
- The rate changes exactly once, at the end of the initial fixed period, and then holds at the estimated adjusted rate for the rest of the term. Real ARMs can adjust repeatedly, usually once a year after the intro ends.
- The estimated rate after adjustment is a figure you enter, not a forecast. The actual reset rate depends on an index plus a margin, bounded by rate caps.
- Payments are principal and interest only. Property taxes, homeowners insurance, HOA dues, and any mortgage insurance are not included.
- No caps are modeled — the calculator uses whatever adjusted rate you type, even if a real ARM's periodic or lifetime cap would limit the jump.
How to read ARM caps
Caps are the ceiling on how much your rate can rise. A structure like 2/2/5 is typical.
| Cap | What it limits |
|---|---|
| Initial cap | Maximum rate increase at the first adjustment |
| Periodic cap | Maximum increase at each later adjustment |
| Lifetime cap | Maximum increase above the start rate, ever |
Source: Freddie Mac PMMS via FRED. Annual averages; latest weekly reading shown.
Common questions
What does a 5/1 ARM mean?
The first number is the years the rate stays fixed; the second is how often it can change after that. A 5/1 ARM is fixed for five years, then adjusts once a year. Set the initial fixed period to 5 here to model it. Common structures are 5/1, 7/1, and 10/1.
How high can my payment go after the reset?
Real ARMs limit the jump with caps, often written as three numbers like 2/2/5 — up to 2% at the first adjustment, 2% at each later one, and 5% above the start rate over the life of the loan. This calculator does not enforce caps, so enter an adjusted rate that respects your loan's caps to stay realistic.
Should I take an ARM instead of a fixed rate?
An ARM makes sense mainly if you expect to sell or refinance before the fixed period ends, since you capture the lower intro rate and never face the reset. If you plan to stay long term, the certainty of a fixed rate is usually worth more than the early savings.