Adjustable-Rate Mortgage Calculator
Enter your initial rate, adjustment period, index, margin, and rate caps to see what your ARM payment does at every reset — under a flat index, a falling index, and the worst case your loan documents allow. A year-by-year amortization table compares it against a 30-year fixed loan.
Your ARM
Fixed for 5 years, then adjusts every 12 months.
Locked for the first 5 years.
Index & Margin
After the fixed period your rate is recalculated as index + margin. The index moves with the market; the margin is fixed for the life of the loan. Both are printed on your loan estimate.
Most new ARMs track 30-day average SOFR.
Never changes. Also acts as the floor on most notes.
How far the index drops before your reset.
Rate Caps (2/2/5)
Caps bound each adjustment no matter what the index does. ARMs that adjust every six months usually carry a smaller periodic cap than annual ARMs.
Ceiling: 11.000%
Your 5/1 ARM payment for the first 5 years
$2,398/mo
That's $236/mo less than the 6.900% fixed loan — $14,172 banked before your first adjustment. After that, your payment can climb as high as $3,624/mo.
Payment if index holds
$2,572
Rate resets to 6.750% in year 6
Highest payment allowed
$3,624
Rate maxes out at 11.000% — +$1,226 vs intro
30-year fixed payment
$2,634
Never changes for 360 months
Three ways your 5/1 ARM can play out
Every column below uses the same loan, caps, and margin. Only the index assumption changes.
Worst case
The index climbs far enough that every adjustment hits its cap.
Index unchanged
The index sits exactly where it is today at every reset.
Index falls
The index drops by the amount you set below and stays there.
Payment path, year by year
Your ARM payment in each loan year under the index unchanged scenario. The dashed line is the fixed-rate payment of $2,634.
Amortization: 5/1 ARM vs 30-year fixed
Interest and balance for each loan year. Shaded rows are years in which the rate adjusted.
| Year | ARM Rate | ARM Payment | ARM Interest | ARM Balance | Fixed Payment | Fixed Interest | Fixed Balance |
|---|---|---|---|---|---|---|---|
| 1 | 6.000% | $2,398 | $23,866 | $395,088 | $2,634 | $27,471 | $395,858 |
| 2 | 6.000% | $2,398 | $23,563 | $389,873 | $2,634 | $27,176 | $391,421 |
| 3 | 6.000% | $2,398 | $23,242 | $384,336 | $2,634 | $26,860 | $386,667 |
| 4 | 6.000% | $2,398 | $22,900 | $378,458 | $2,634 | $26,521 | $381,576 |
| 5 | 6.000% | $2,398 | $22,538 | $372,217 | $2,634 | $26,158 | $376,121 |
| 6 | 6.750% | $2,572 | $24,944 | $366,301 | $2,634 | $25,770 | $370,278 |
| 7 | 6.750% | $2,572 | $24,532 | $359,973 | $2,634 | $25,354 | $364,019 |
| 8 | 6.750% | $2,572 | $24,091 | $353,204 | $2,634 | $24,908 | $357,314 |
| 9 | 6.750% | $2,572 | $23,620 | $345,963 | $2,634 | $24,430 | $350,132 |
| 10 | 6.750% | $2,572 | $23,116 | $338,219 | $2,634 | $23,919 | $342,438 |
| 11 | 6.750% | $2,572 | $22,577 | $329,935 | $2,634 | $23,371 | $334,196 |
| 12 | 6.750% | $2,572 | $22,000 | $321,074 | $2,634 | $22,784 | $325,367 |
| 13 | 6.750% | $2,572 | $21,383 | $311,597 | $2,634 | $22,155 | $315,909 |
| 14 | 6.750% | $2,572 | $20,723 | $301,460 | $2,634 | $21,481 | $305,777 |
| 15 | 6.750% | $2,572 | $20,017 | $290,617 | $2,634 | $20,760 | $294,924 |
| 16 | 6.750% | $2,572 | $19,262 | $279,018 | $2,634 | $19,987 | $283,298 |
| 17 | 6.750% | $2,572 | $18,455 | $266,613 | $2,634 | $19,159 | $270,844 |
| 18 | 6.750% | $2,572 | $17,591 | $253,343 | $2,634 | $18,272 | $257,503 |
| 19 | 6.750% | $2,572 | $16,667 | $239,150 | $2,634 | $17,321 | $243,211 |
| 20 | 6.750% | $2,572 | $15,679 | $223,968 | $2,634 | $16,303 | $227,902 |
| 21 | 6.750% | $2,572 | $14,622 | $207,729 | $2,634 | $15,213 | $211,502 |
| 22 | 6.750% | $2,572 | $13,491 | $190,360 | $2,634 | $14,045 | $193,934 |
| 23 | 6.750% | $2,572 | $12,281 | $171,781 | $2,634 | $12,794 | $175,115 |
| 24 | 6.750% | $2,572 | $10,988 | $151,909 | $2,634 | $11,453 | $154,955 |
| 25 | 6.750% | $2,572 | $9,604 | $130,652 | $2,634 | $10,017 | $133,360 |
| 26 | 6.750% | $2,572 | $8,124 | $107,916 | $2,634 | $8,479 | $110,227 |
| 27 | 6.750% | $2,572 | $6,541 | $83,597 | $2,634 | $6,832 | $85,445 |
| 28 | 6.750% | $2,572 | $4,848 | $57,585 | $2,634 | $5,067 | $58,899 |
| 29 | 6.750% | $2,572 | $3,037 | $29,761 | $2,634 | $3,176 | $30,462 |
| 30 | 6.750% | $2,572 | $1,099 | $0 | $2,634 | $1,150 | $0 |
Rate and payment are shown as of the last month of each loan year. A twelve-month ARM adjusts once per year, so the figure reflects the most recent adjustment.
Lenders don't qualify you at the intro rate.
Under federal ability-to-repay rules, a lender underwriting an ARM must use the highest rate that can apply during the first five years — not the teaser. So your approval, and your debt-to-income ratio, are judged against a payment closer to $3,624 than to $2,398. If that number makes you uncomfortable, that discomfort is the actual signal.
The four numbers that decide your ARM payment
An adjustable-rate mortgage looks like a fixed loan for a while, then becomes a formula. Four inputs drive everything that happens after the fixed period ends, and they appear on page two of your loan estimate:
- The initial rate — what you pay during the fixed period. It is the only rate on the loan you are actually promised.
- The adjustment period — how often the rate resets once the fixed years are up. A 5/1 adjusts annually; a 5/6 adjusts every six months.
- The index and margin — at each reset, your new rate is recalculated from scratch as index plus margin. The index floats with the market; the margin never changes.
- The caps — a hard limit on how far the rate can move at the first adjustment, at each later one, and across the life of the loan.
Notice what isn't on that list: the intro rate has no bearing on where the loan resets to. It only sets the starting point the caps measure from. That is why the fully-indexed rate — index plus margin, shown in the calculator above — matters more than the teaser. If your intro rate is 6% and the fully-indexed rate is already 6.75%, your payment goes up at the first reset even if the market never moves.
Why the payment jumps more than the rate does
At each adjustment the lender does two things, and borrowers usually anticipate only the first. It sets a new rate, then it re-amortizes: the new payment is whatever it takes to pay off your remaining balance over the remainingterm. After a 5/1 ARM's first reset, the clock is 25 years, not 30.
That compressed schedule is why a one-point rate increase produces more than a one-point payment increase. The amortization table above shows both loans side by side so you can watch the effect directly — the ARM's balance and the fixed loan's balance diverge in the years after the reset, even though both started at the same amount. If you want to see the mechanics on a loan with a single unchanging rate, the amortization schedule calculator breaks a fixed loan down month by month.
Reading the three scenarios
Nobody knows where the index will be in five years, so the calculator refuses to pretend. It runs your loan three times instead, holding the loan amount, margin, and caps constant and changing only the assumption about the index.
Index unchanged is the honest default: the rate walks to your fully-indexed rate and stays. Worst case assumes the index rises far enough that every adjustment hits its cap, which produces the highest payment your note legally permits — this is not a forecast, it is the disclosed maximum, and it is the number to budget against. Index falls shows the upside, bounded by the rate floor most notes set at the margin.
Read the worst-case column first. Federal ability-to-repay rules already force your lender to qualify you at roughly that payment rather than the intro payment, so it is the figure your approval was built on. If you could not comfortably carry it, the intro discount is not a discount — it is a deferral.
When the ARM math actually works
The savings from an ARM are front-loaded and finite: they accrue only during the fixed period, and the calculator totals them for you. The risk is back-loaded and open-ended. An ARM therefore rewards one specific thing — a short, confident holding period. If you expect to sell or refinance before the first adjustment, the adjustments never happen to you and the intro discount is pure gain.
The plan fails in the way plans usually fail: on timing. Refinancing depends on your credit, your home's appraised value, and prevailing rates at a future moment you don't control — and an ARM reset tends to arrive precisely when rates are high, which is exactly when refinancing is most expensive. Pressure-test the exit before you rely on it with the refinance calculator.
If you want the crossover point rather than the payment path — the year at which an ARM's cumulative interest overtakes a fixed loan's — use the ARM vs fixed-rate break-even calculator. And if the choice you're really weighing is term rather than rate structure, 15 vs 30-year mortgage compares two loans that both keep the payment fixed.
Frequently Asked Questions
How do you calculate an adjustable-rate mortgage payment?
During the fixed period the payment is a standard amortizing payment on the intro rate over the full 30-year term. At each adjustment the lender recalculates the rate as index + margin, applies the caps, and then re-amortizes the remaining balance over the remaining term. That second step is what people miss: after a 5/1 ARM's first reset the new payment must retire the remaining balance in 25 years, not 30, so the payment rises a little more than the rate change alone implies. The calculator above runs both steps for every month of the loan.
What is the fully-indexed rate on an ARM?
The fully-indexed rate is your index plus your margin — the rate your loan resets to if the index doesn't move between now and your first adjustment. On a loan with a 4.00% index and a 2.75% margin, the fully-indexed rate is 6.75%. If your intro rate is below that, your payment will rise at the first reset even if rates stay perfectly flat. Comparing your intro rate to the fully-indexed rate is the single fastest way to see whether the teaser is a real discount or a deferred increase.
What is the index and margin on an ARM?
The index is a published market rate your loan tracks — most ARMs written today use the 30-day average SOFR, replacing LIBOR. It moves over the life of the loan and neither you nor your lender controls it. The margin is a fixed number of percentage points the lender adds on top, set at closing and unchanged for all 30 years. On most notes the margin also acts as the rate floor. The margin is negotiable before you sign and the index is not, so the margin is the number worth shopping.
How much can a 5/1 ARM payment go up?
That's set by your rate caps, usually written as three numbers like 2/2/5. The first is the maximum rate change at the first adjustment, the second is the maximum at each later adjustment, and the third is the maximum increase over your intro rate for the life of the loan. A 5/1 ARM starting at 6% with 2/2/5 caps can hit 8% in year six, 10% in year seven, and 11% thereafter. On a $400,000 loan that takes the payment from roughly $2,400 to well over $3,000. Enter your own caps above to see the exact ceiling your loan documents allow.
What does 5/1 ARM mean, and how is 5/6 different?
The first number is the years the rate stays fixed; the second is how often it adjusts afterward. A 5/1 ARM is fixed for five years, then adjusts once a year. A 5/6 ARM is also fixed for five years, but then adjusts every six months. The 5/6 structure has become the standard for SOFR-indexed loans, and it typically carries a smaller periodic cap to offset the more frequent adjustments. Both are 30-year loans, and both are modeled in the calculator above.
Can an ARM payment go down?
Yes. If the index falls, the fully-indexed rate falls with it and your payment drops at the next adjustment, bounded by the same caps that limit increases. Two floors get in the way. Most notes state that the rate can never fall below the margin, and the periodic cap limits how fast it can come down. Select the "index falls" scenario above to see the downside case with your own numbers — it's a real possibility, just not one to plan a budget around.
Will a lender approve me based on my ARM's intro payment?
No. Federal ability-to-repay rules require lenders underwriting an ARM to qualify you using the highest rate that can apply during the first five years, not the introductory rate. Your debt-to-income ratio is measured against that higher payment. This is why some borrowers are surprised to find an ARM doesn't stretch their budget any further than a fixed loan — the qualifying math already assumes the reset.
Should I get an ARM or a fixed-rate mortgage?
It depends on how long you'll hold the loan. The ARM's intro discount is real and banked; the risk arrives only after the fixed period. If you're confident you'll sell or refinance before the first adjustment, the ARM usually wins. If you might still be in the loan afterward, you're betting on rates or on being able to refinance on schedule, neither of which you control. Our ARM vs fixed-rate break-even calculator answers that specific question by finding the year the ARM's cumulative interest passes the fixed loan's.