Estimate how an adjustable-rate mortgage payment can change after the fixed period, within the loan's rate caps, and compare it with a fixed-rate loan.
Initial monthly payment (P&I)
Payment after first adjustment
$2,050.89
Highest payment
$2,802.82
Highest rate
10.75%
Total interest (ARM)
$610,270.67
Fixed-rate payment
$2,022.62
Total interest (fixed rate)
$408,142.36
ARM payment
Fixed-rate payment
Year
Rate
Monthly payment
Interest
Principal
Ending balance
1
5.75%
$1,867.43
$18,292.63
$4,116.56
$315,883.44
2
5.75%
$1,867.43
$18,049.59
$4,359.60
$311,523.83
3
5.75%
$1,867.43
$17,792.20
$4,616.99
$306,906.84
4
5.75%
$1,867.43
$17,519.62
$4,889.58
$302,017.26
5
5.75%
$1,867.43
$17,230.94
$5,178.26
$296,839.00
6
6.75%
$2,050.89
$19,892.43
$4,718.30
$292,120.69
7
7.75%
$2,236.93
$22,486.77
$4,356.40
$287,764.30
8
8.75%
$2,424.73
$25,018.39
$4,078.39
$283,685.91
9
9.75%
$2,613.58
$27,489.31
$3,873.63
$279,812.28
10
10.75%
$2,802.82
$29,899.37
$3,734.49
$276,077.79
11
10.75%
$2,802.82
$29,477.53
$4,156.33
$271,921.47
12
10.75%
$2,802.82
$29,008.04
$4,625.82
$267,295.65
13
10.75%
$2,802.82
$28,485.52
$5,148.34
$262,147.31
14
10.75%
$2,802.82
$27,903.97
$5,729.89
$256,417.42
15
10.75%
$2,802.82
$27,256.74
$6,377.12
$250,040.30
16
10.75%
$2,802.82
$26,536.39
$7,097.47
$242,942.83
17
10.75%
$2,802.82
$25,734.67
$7,899.19
$235,043.64
18
10.75%
$2,802.82
$24,842.40
$8,791.46
$226,252.18
19
10.75%
$2,802.82
$23,849.33
$9,784.53
$216,467.65
20
10.75%
$2,802.82
$22,744.09
$10,889.77
$205,577.88
21
10.75%
$2,802.82
$21,514.00
$12,119.86
$193,458.02
22
10.75%
$2,802.82
$20,144.97
$13,488.89
$179,969.13
23
10.75%
$2,802.82
$18,621.29
$15,012.57
$164,956.56
24
10.75%
$2,802.82
$16,925.50
$16,708.36
$148,248.20
25
10.75%
$2,802.82
$15,038.16
$18,595.70
$129,652.50
26
10.75%
$2,802.82
$12,937.62
$20,696.24
$108,956.26
27
10.75%
$2,802.82
$10,599.82
$23,034.04
$85,922.22
28
10.75%
$2,802.82
$7,997.94
$25,635.92
$60,286.30
29
10.75%
$2,802.82
$5,102.15
$28,531.71
$31,754.59
30
10.75%
$2,802.82
$1,879.27
$31,754.59
$0.00
How an ARM works
An adjustable-rate mortgage has a fixed rate for an initial period, such as 5 years on a 5/1 or 5/6 ARM. After
that the rate resets at regular intervals based on a market index plus the lender's margin, and the payment is
recalculated on the remaining balance and term.
Rate caps
Caps limit how far the rate can rise. A 2/2/5 cap structure means the rate can go up at most 2 points at the
first adjustment, 2 points at each later adjustment and 5 points over the life of the loan. Setting the expected
rise equal to the caps shows the worst case.
Example
A $320,000 5/1 ARM at 5.75% starts at $1,867.43
a month. If the rate rises 1 point at each adjustment, the payment becomes
$2,050.89 after year 5 and can reach $2,802.82 at
10.75%. A 30-year fixed loan at 6.5% costs $2,022.62
a month.
Frequently asked questions
What do 5/1 and 5/6 mean?
The first number is the fixed period in years. The second is how often the rate adjusts after that: 1 means once a year, 6 means every 6 months.
Can the rate go down?
Yes, if the index falls. This calculator models rising or unchanged rates so you can see how high the payment could go. Enter 0 as the expected rise to keep the rate unchanged.
When is an ARM a good choice?
When you expect to sell or refinance before the fixed period ends, or when the lower starting payment matters and you can afford the payment at the lifetime cap.