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Adjustable-Rate Mortgage (ARM) Calculator

An ARM starts with a fixed rate and then adjusts. See your starting payment and the highest payment the caps would allow, so you know the risk before you choose one.
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Maximum increase at the first adjustment, in points.

Maximum increase at each adjustment after the first.

Maximum total increase over the starting rate.

Starting payment (principal and interest)

$2,081.90

Fixed for 5 years

  • Payment after the first adjustment (worst case)Rate up to 8.78%$2,476.69
  • Highest possible paymentAt the 11.78% rate ceiling$3,087.93
  • Fixed-rate payment for comparison$2,189.48
  • Total interest if rates stay flat after the fixed period$429,484
  • Total interest in the worst case$716,603
  • Total interest on the fixed-rate loan$468,213
Worst-case adjustments
MonthRatePayment
Month 618.78%$2,476.69
Month 739.78%$2,679.49
Month 8510.78%$2,883.43
Month 9711.78%$3,087.93
Month 10911.78%$3,087.93
Month 12111.78%$3,087.93
Month 13311.78%$3,087.93
Month 14511.78%$3,087.93
Month 15711.78%$3,087.93
Month 16911.78%$3,087.93

First 10 adjustments shown.

The worst case assumes rates rise by the maximum allowed at every adjustment. Real adjustments depend on the index and margin, so your actual rate could be lower or stay flat. Check your loan's caps and index.

Starting payment (principal and interest)

$2,081.90

Details

How an adjustable-rate mortgage works

An ARM has a fixed rate for an initial period, such as five, seven or ten years, then the rate resets at set intervals based on a market index plus a margin. A 5/6 ARM, for example, is fixed for five years and then adjusts every six months. The starting rate is often lower than a fixed-rate loan, which is the appeal.

Caps limit how much the rate can change. They are usually written as three numbers, such as 2/1/5: the most the rate can rise at the first adjustment, at each later adjustment, and over the life of the loan.

The trade-off

You get a lower payment up front in exchange for the risk that it rises later. An ARM can make sense if you expect to sell or refinance before the fixed period ends, or can comfortably afford the worst-case payment. It is a poor fit if you would be stretched by the highest payment the caps allow.

Frequently asked questions

What do the rate caps 2/1/5 mean?

The rate can rise by at most 2 percentage points at the first adjustment, at most 1 point at each later adjustment, and at most 5 points above the starting rate over the life of the loan.

Can an ARM payment go down?

Yes. If the index falls, the rate can drop at an adjustment, subject to any floor in your loan terms. This calculator shows the worst case and the flat case so you can see the range.

Should I choose an ARM or a fixed rate?

If you may keep the loan beyond the fixed period and could not afford the worst-case payment, a fixed rate is safer. If you plan to move or refinance soon, the lower starting rate of an ARM can save money.

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Estimates for education and planning only. TotalMonthly is not a lender or advisor; confirm figures with a licensed professional. See the methodology and disclaimer.