ARM Calculator
Adjustable-rate mortgage payments, resets and the worst case
- Fixed-rate payment at 6.5%principal and interest
- $2,275.44
- Saved in the first 7 yearsvs. the fixed-rate loan
- $9,833
- After the first adjustmentexpected rate 6.75%
- $2,305.43
- Worst case under the caps11% from year 8
- $3,217.36
- Interest over the full termARM (expected) vs. fixed
- ✓ ARM $1,559 less
- ARM costs more than fixed fromtotal payments, expected rates
- ✓ Not within the term
Free to compare. No obligation.
Estimate, not a loan offer. Future ARM rates depend on the index; the worst case shows the caps, not a forecast. Principal and interest only. We may earn a commission when you click. It does not change your estimate. How we calculate · How we make money
| Year | Expected rate | Expected payment | Worst-case rate | Worst-case payment | Fixed payment |
|---|---|---|---|---|---|
| 1 | 6% | $2,158.38 | 6% | $2,158.38 | $2,275.44 |
| 2 | 6% | $2,158.38 | 6% | $2,158.38 | $2,275.44 |
| 3 | 6% | $2,158.38 | 6% | $2,158.38 | $2,275.44 |
| 4 | 6% | $2,158.38 | 6% | $2,158.38 | $2,275.44 |
| 5 | 6% | $2,158.38 | 6% | $2,158.38 | $2,275.44 |
| 6 | 6% | $2,158.38 | 6% | $2,158.38 | $2,275.44 |
| 7 | 6% | $2,158.38 | 6% | $2,158.38 | $2,275.44 |
| 8 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 9 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 10 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 11 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 12 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 13 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 14 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 15 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 16 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 17 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 18 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 19 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 20 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 21 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 22 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 23 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 24 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 25 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 26 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 27 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 28 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 29 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
| 30 | 6.75% | $2,305.43 | 11% | $3,217.36 | $2,275.44 |
Compare ARM and fixed-rate offers
ARM starting rates, margins and caps vary by lender. Ask for both a fixed-rate and an ARM quote and compare them here.
Free to compare. No obligation.
How an adjustable-rate mortgage works
An ARM has a fixed rate for its first few years, then resets at regular intervals. A 7/6 ARM is fixed for 7 years and then adjusts every 6 months. Each new rate is an index, usually SOFR, plus a margin set in your loan, limited by the caps. When the rate changes, the payment is recalculated on the remaining balance and term.
With the example numbers, a 6% ARM on $360,000 starts at about $2,158 a month, compared with $2,275 on a 6.5% fixed-rate loan. That saves about $9,800 over the first 7 years. If the rate then resets to 6.75%, the payment rises to about $2,305. In the worst case the caps allow, 11%, it would be about $3,217.
Reading ARM caps
Caps are usually written as three numbers, such as 5/1/5 or 2/1/5: the most the rate can move at the first adjustment, at each later adjustment, and over the life of the loan. Your Loan Estimate lists your loan's index, margin and caps.
Is an ARM right for you?
- It can make sense if you expect to sell or refinance before the fixed period ends.
- Check that you could afford the worst-case payment, not just the starting one.
- Refinancing later isn't guaranteed: rates, your home's value and your finances can all change.
Frequently asked questions
How does an adjustable-rate mortgage work?
An ARM starts with a fixed rate for a set period, often 5, 7 or 10 years. After that, the rate resets at regular intervals to an index (usually SOFR) plus a fixed margin, limited by caps. A 7/6 ARM is fixed for 7 years, then adjusts every 6 months.
What do ARM caps like 5/1/5 mean?
The first number is the most the rate can change at the first adjustment, the second is the most at each later adjustment, and the third is the most it can ever rise above the starting rate. Your Loan Estimate lists your loan's caps.
What is the worst-case payment on an ARM?
It's the payment if the rate rises as fast and as far as the caps allow. With the example numbers, a 6% 7/6 ARM on $360,000 starts at about $2,158 a month and could reach about $3,217 at the 11% lifetime cap. Make sure you could afford that before choosing an ARM.
When does an ARM make sense?
Usually when you expect to sell or refinance before the fixed period ends, so you keep the lower starting rate and avoid most of the reset risk. Refinancing isn't guaranteed, since rates, home values and your finances can change.