ARM Calculator Guide

It estimates payments on an adjustable-rate mortgage across the fixed introductory period and the adjustment periods that follow, including worst-case rate caps.

The Complete Guide

An adjustable-rate mortgage trades long-term certainty for a lower initial rate. For the right borrower — one who plans to move or refinance before the fixed period ends — that lower intro rate is real savings. For everyone else, it is a bet on future rates.

The key terms are the caps. They limit how much your rate can rise at each adjustment and over the loan's life, which bounds your worst case. Never evaluate an ARM on the intro payment alone; evaluate it on the capped maximum.

Run the worst-case scenario in the calculator and ask whether you could afford that payment. If the answer is no and you might still own the home when it adjusts, a fixed-rate loan is the safer choice despite the higher starting rate.

How the Calculator Works

The calculator amortizes at the low intro rate during the fixed period, then projects payments at the maximum the rate can reach under the caps, so you see both the best case and the worst case after the loan adjusts.