ARM Mortgage Calculator
Compare fixed-rate and adjusted-rate payments for a 5/1, 7/1, or 10/1 ARM.
See how rate caps affect your monthly payment after the fixed-rate period ends.
Adjustable-Rate Mortgage (ARM)
An ARM starts with a fixed interest rate for an initial period, then adjusts periodically based on a market index (typically SOFR or the 1-year Treasury). ARMs are named by their structure — a 5/1 ARM is fixed for 5 years, then adjusts every 1 year.
Monthly payment formula:
Payment = P × [r(1+r)^n] / [(1+r)^n - 1]
Where: P = principal, r = monthly rate, n = remaining months
ARM name decoder:
| ARM Type | Fixed Period | Adjustment Frequency |
|---|---|---|
| 3/1 ARM | 3 years | Every 1 year |
| 5/1 ARM | 5 years | Every 1 year |
| 7/1 ARM | 7 years | Every 1 year |
| 10/1 ARM | 10 years | Every 1 year |
Rate caps — the most important ARM feature:
| Cap Type | What it limits |
|---|---|
| Initial cap | Maximum change at first adjustment (e.g., +2%) |
| Periodic cap | Maximum change at each subsequent adjustment (e.g., +2%) |
| Lifetime cap | Maximum total change over the life of the loan (e.g., +5%) |
A 5/1 ARM with caps of 2/2/5 means: first adjustment can go up at most 2%, each later adjustment at most 2%, and the rate can never be more than 5% above the initial rate.
When ARMs make sense:
- You plan to sell or refinance before the fixed period ends
- Rates are expected to fall — your payment may drop after adjustment
- You need a lower initial payment to qualify for a larger loan
Risk: If rates rise sharply, your payment after the fixed period could increase significantly.
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
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