ARM Mortgage Calculator — Adjustable Rate Mortgage
See your ARM (Adjustable-Rate Mortgage) initial payment and how payments could change when the rate adjusts. Enter your loan details, fixed period, annual adjustment size and interest-rate caps to project payments and compare against the worst-case (lifetime cap) scenario.
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Loan term
Fixed period
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Payment during the fixed-rate period (principal + interest only)
- 1
Monthly interest rate
5% ÷ 12 ÷ 100 = 0.004167 - 2
Number of payments
30 × 12 = 360 - 3
Growth factor
(1 + 0.004167)ⁿ (n = 360) = 4.4677How much one unit grows over the full term at the monthly rate. - 4
Initial monthly payment
300,000 × 0.004167 × 4.4677 ÷ (4.4677 − 1) = 1,610.46
How does this calculator work?
An ARM locks a low initial rate for a fixed period (e.g., 5 years), then adjusts annually by a set margin, capped by periodic and lifetime limits. Monthly payment = B × r_m / (1 − (1+r_m)^(−n)). After each adjustment, the formula reapplies to the remaining balance at the new rate. Rate projections are illustrative estimates — actual adjustments depend on your loan index at each reset date.
Formula
How this is calculated
An Adjustable-Rate Mortgage has two phases. During the initial fixed period (e.g., 5 years for a 5/1 ARM) the interest rate does not change and the payment is computed with the standard amortisation formula: PMT = B × r_m / (1 − (1 + r_m)^(−n)), where B is the remaining loan balance, r_m is the monthly rate (annual rate ÷ 12), and n is the number of remaining months. At the end of this period the unpaid balance is rolled into a new amortisation schedule at the adjusted rate for the remaining term.
After the fixed period, the rate adjusts periodically (typically annually) by the stated margin, subject to two caps: a periodic cap limits how much the rate can move in any single adjustment period (commonly 2%), and a lifetime cap limits total movement from the initial rate over the entire loan (commonly 5–6 percentage points). The calculator applies both constraints at each simulated adjustment and recomputes the payment for the remaining balance and term.
The chart shows projected monthly payments year by year under the stated adjustment scenario. The "maximum possible payment" is computed at the lifetime-cap rate applied immediately after the fixed period — this is the worst-case, useful for stress-testing affordability. These projections are illustrative: actual ARM rates depend on the chosen index (SOFR, CMT, etc.) plus the lender margin at each reset date. Taxes and insurance are not included.
Frequently asked questions
The periodic cap limits how much the interest rate can change in any single adjustment period (usually one year). The lifetime cap limits the total increase over the entire life of the loan from the initial rate. For example, a 5/2/5 ARM has a 5% first-adjustment cap, a 2% subsequent periodic cap, and a 5% lifetime cap.
An ARM can save money if you plan to sell or refinance before the fixed period ends, or when the initial rate is significantly lower than fixed-rate alternatives. If you expect to stay long-term or if rates are trending up, a fixed rate offers payment certainty. Compare the total cost over your expected ownership period.
After the fixed period ends, the rate typically rises (if the market index has increased), and the remaining term is shorter than the original term — both factors raise the monthly payment. The calculator shows the payment at the first adjustment using the remaining balance and remaining months.
Also known as
TG we-Calculate Editorial Team. (2026). ARM Mortgage Calculator — Adjustable Rate Mortgage [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/arm-mortgage-calculator
TG we-Calculate Editorial Team. "ARM Mortgage Calculator — Adjustable Rate Mortgage." TG we-Calculate. 2026. https://we-calculate.com/calculator/arm-mortgage-calculator.
TG we-Calculate Editorial Team, "ARM Mortgage Calculator — Adjustable Rate Mortgage," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/arm-mortgage-calculator
@misc{wecalculate_arm_mortgage_calculator, title = {ARM Mortgage Calculator — Adjustable Rate Mortgage}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/arm-mortgage-calculator}}, year = {2026}, note = {TG we-Calculate} }
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