401(k) Loan Calculator
Calculate 401(k) loan repayment, interest paid back to yourself, and the opportunity cost of lost market returns. See the true cost of borrowing from retirement.
ARM Mortgage Calculator
Calculate adjustable-rate mortgage payments for fixed and adjusted periods. Compare ARM vs fixed-rate scenarios with rate caps and payment projections.
$
%
%
yrs
yrs
%
%
Fixed Period Payment⧉
$2,271.16
For first 5 years
Adjusted Period Payment⧉
$2,854.50
After fixed period ends
Payment Increase⧉
+$583.35
+25.7% jump
Balance at Adjustment⧉
$369,842.41
After 5 years
Total Interest (ARM)⧉
$592,620.48
Fixed + adjusted interest
vs Fixed-Rate Interest⧉
$417,616.16
At 5.5% for 30yr
ARM Savings/(Cost)⧉
-$175,004.32
ARM costs more
Payment Timeline
Fixed: $2,271.16/mo
Adjusted: $2,854.50/mo
Scenario Analysis
| Scenario | Rate After Fixed Period | Adjusted Payment |
|---|---|---|
| Rate stays fixed | 5.50% | $2,271.16 |
| Adj rate (expected) | 8.00% | $2,854.50 |
| Worst case (lifetime cap) | 10.50% | $3,491.98 |
Planning notes, formulas, and examples
About the ARM Mortgage Calculator
An adjustable-rate mortgage (ARM) offers a lower interest rate during an initial fixed period, then adjusts periodically based on a market index. Common structures include 5/1, 7/1, and 10/1 ARMs, where the first number is the fixed period in years and the second is how often the rate adjusts after that.
ARMs can save money if you plan to sell or refinance before the fixed period ends. However, they carry risk — if rates rise significantly, your payment could jump substantially when the adjustment kicks in. Rate caps limit how much the rate can increase per adjustment and over the loan's lifetime, providing some protection.
This calculator models both the fixed and adjustable periods, showing your payment before and after adjustment. It includes scenario analysis for best-case, expected, and worst-case outcomes, helping you evaluate whether the lower initial rate justifies the adjustment risk. Compare ARM total interest against a fixed-rate alternative to make an informed decision.
When This Page Helps
ARMs are complex products where the initial savings may or may not outweigh the risk of higher future payments. This calculator quantifies both sides — showing exactly how much you save during the fixed period and how much more you could pay after adjustment. That clarity helps you decide if an ARM fits your timeline and risk tolerance.
How to Use the Inputs
- Enter the loan amount.
- Set the fixed-period interest rate and expected adjusted rate.
- Choose the fixed period length (3, 5, 7, or 10 years).
- Set the total loan term.
- Configure rate caps (periodic and lifetime).
- Review the payment timeline and scenario analysis.
- Compare ARM total interest against the fixed-rate equivalent.
Formula used
Fixed-period payment: M = P × [r₁(1+r₁)^N] / [(1+r₁)^N − 1] where r₁ = fixed monthly rate, N = total months. Balance at adjustment: computed by running the amortization. Adjusted payment: M₂ = B × [r₂(1+r₂)^n₂] / [(1+r₂)^n₂ − 1] where B = remaining balance, r₂ = adjusted monthly rate, n₂ = remaining months.Example Calculation
Result: Fixed: $2,271/mo → Adjusted: $2,780/mo — +$509/mo (+22.4%) payment increase
A $400,000 5/1 ARM at 5.5% has a payment of $2,271 for the first 5 years. When the rate adjusts to 8.0%, the payment jumps to $2,780 — a $509 monthly increase. Over 30 years, total interest is approximately $496,000, compared to $417,000 if you had locked in 5.5% fixed.
Tips & Best Practices
- ARMs make sense if you plan to sell or refinance within the fixed period.
- Always model the worst case (lifetime cap rate) to ensure you can afford the maximum payment.
- The periodic cap limits each adjustment, but the lifetime cap determines the absolute maximum rate.
- Rate caps of 2/2/5 are common: 2% first adjustment, 2% each subsequent, 5% lifetime total.
- Compare the ARM initial savings against the potential cost if rates rise — calculate the break-even point.
- In a rising rate environment, locking in a fixed rate may be safer even with a slightly higher initial payment.
ARM Payment Risk
An ARM usually starts with a lower fixed rate than a comparable fixed-rate mortgage, but the tradeoff is uncertainty after the first reset. The page is most useful when you want to compare that initial payment relief against the risk of a higher later payment.
Why Rate Caps Matter
Initial, periodic, and lifetime caps determine how sharply the rate can change after the fixed period ends. Two loans with the same starting rate can behave very differently if one has looser caps or a higher fully indexed rate.
Use It As A Scenario Worksheet
This calculator is intentionally simple: it models one fixed stage and one reset stage. Use it to compare payment shock and total interest under a few rate scenarios, then confirm the actual index, margin, reset schedule, and cap structure in the loan documents before making a lending decision.
Sources & Methodology
Last updated:
Methodology
This calculator models a hybrid ARM in two stages. It first computes the payment during the introductory fixed-rate period using a standard fully amortizing payment formula over the full original term, then amortizes the remaining balance using a single adjusted rate for the rest of the term. The scenario table compares a no-change case, the entered adjusted-rate case, and a lifetime-cap case.
The page is a simplified ARM worksheet, not a full note-level simulator. It does not model index-plus-margin mechanics, multiple future reset dates, carryover, floors, or adjustment-frequency changes after the first reset, so it should be used for payment-risk planning rather than as a substitute for lender disclosures.
Sources
- Adjustable-Rate Mortgages: Find out how your payment can change over time (Consumer Financial Protection Bureau) — CFPB’s ARM booklet landing page and consumer overview of hybrid ARM structure and payment changes.
- What are rate caps with an adjustable-rate mortgage (ARM), and how do they work? (Consumer Financial Protection Bureau) — Explains initial, periodic, and lifetime ARM caps, which anchor the calculator’s cap-based scenarios.
- For an adjustable-rate mortgage (ARM), what are the index and margin, and how do they work? (Consumer Financial Protection Bureau) — Consumer explanation of how ARM reset rates are derived from an index plus margin, subject to caps.
Frequently Asked Questions
The 5 means the rate is fixed for 5 years. The 1 means it adjusts once per year after that. Common variants include 3/1, 7/1, and 10/1 ARMs. The longer the fixed period, the higher the initial rate (but still below fixed-rate equivalents).
ARM rates are tied to an index (like SOFR or Treasury rates) plus a margin (typically 2–3%). At each adjustment, the new rate = current index value + margin, subject to rate caps.
Rate caps limit how much your rate can change. The initial cap limits the first adjustment (often 2%). The periodic cap limits subsequent adjustments (often 2%). The lifetime cap limits total increase over the loan's life (often 5-6% above the initial rate).
Yes. If the index rate drops, your payment can decrease at the next adjustment date, subject to a floor (minimum) rate. However, rates tend to be low when ARMs originate, so increases are more common than decreases.
ARMs are advantageous when you plan to move or refinance before the fixed period ends, when current fixed rates are significantly higher, or when you expect rates to fall. If you plan to stay in the home long-term, a fixed rate provides certainty.
Payment shock is the sudden increase in monthly payment when an ARM adjusts. A $400K ARM going from 5.5% to 8% can see payments jump $500+/month. Lenders sometimes qualify ARM borrowers at a higher rate to ensure they can handle potential increases.
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