ARM Calculator
Estimate the intro payment on an adjustable-rate mortgage and the potential payment shock when the rate first adjusts.
By Onias Derilus, Mortgage Capital · NMLS# 1859012 · Last Updated: June 2026
Models a 5/6 ARM: fixed for 5 years, then adjusting. The first-adjustment cap limits how far the rate can jump initially. Estimate only — index and margin drive real rates.
An adjustable-rate mortgage offers a lower fixed rate for an introductory period — often five years — then adjusts periodically based on a market index plus a margin. The lower start can save money if you sell or refinance before it adjusts.
The risk is payment shock: when the rate resets, your payment can jump. Rate caps limit how far it can move at the first adjustment and over the life of the loan.
How to Use This Calculator
- 1
Enter your loan amount.
- 2
Set the introductory fixed rate offered during the initial period.
- 3
Estimate the fully-indexed rate the loan could reach after adjusting.
- 4
Set the first-adjustment cap, then compare the intro payment to the post-adjustment payment.
The Formula & Assumptions
Intro P&I = payment at intro rate
After 5 years, balance amortizes,
then re-amortizes over 25 years
at min(fully-indexed, intro + cap)
Shock = adjusted − intro payment
We model a common 5/6 ARM: a fixed rate for five years, then adjustments. After the fixed period the remaining balance is re-amortized over the remaining term at the new rate.
The first-adjustment cap limits how far the rate can rise at the initial reset, even if the fully-indexed rate is higher. Lifetime caps limit the total increase over the loan.
Real ARM rates after adjustment equal an index (such as SOFR) plus a fixed margin, subject to the caps. Because the index moves, the post-adjustment payment shown here is an illustration, not a guarantee.
Frequently Asked Questions
What does 5/6 ARM mean?
The first number is the years the rate stays fixed — five — and the second is how often it adjusts afterward, every six months. A 7/6 ARM stays fixed for seven years before adjusting semiannually.
When does an ARM make sense?
An ARM can save money if you expect to sell or refinance before the fixed period ends, or if intro rates are meaningfully lower than fixed rates. The risk is being caught in the adjustable period when rates are high.
How high can my ARM payment go?
Rate caps limit it. There is usually a cap on the first adjustment, a cap on each later adjustment, and a lifetime cap. The fully-indexed rate cannot exceed the lifetime cap above your start rate.
How is the adjusted rate calculated?
After the fixed period, the rate equals a published index plus a fixed margin set in your note, subject to the caps. Because the index moves with the market, your future payment is not fixed.
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Rates are illustrative only. APR and payments vary by credit score, loan amount, and market conditions. Subject to credit approval. Not a commitment to lend. NMLS# 1859012. Equal Housing Lender.