ARM Calculator
Calculate your adjustable-rate mortgage payment during the fixed period, stress-test what happens when the rate resets, and see whether ARM or 30-year fixed saves you more money based on how long you plan to stay.
How to Use This Calculator
Fixed Period tab
Enter your loan amount, initial teaser rate, and select your ARM type (5/1, 7/1, or 10/1). The calculator shows your exact monthly payment during the fixed period, total interest paid before the first reset, and remaining loan balance when the rate adjustment begins.
After Reset tab
Add the current SOFR index rate and your loan's margin to model what happens when the rate adjusts. Expand "More options" to enter your rate caps. The calculator shows three scenarios: best case (index drops 1.5%), expected (current index plus margin), and worst case (initial rate plus lifetime cap). Each scenario shows the new payment and dollar change from your fixed-period payment.
ARM vs Fixed tab
Enter both rates and the calculator computes total cost at 5, 7, 10, and 30 year horizons. This answers the core question: if you sell in 5 years, does the ARM teaser savings outweigh the risk? If you stay 30 years, does rate certainty justify the higher fixed rate?
Share your result
Every input is encoded in the URL. Click Share to send your exact scenario to a loan officer, co-borrower, or financial advisor.
The Formula
ARM payments use the standard mortgage payment formula, applied first to the teaser rate and then recalculated after each rate adjustment:
Where:
r = Annual Rate ÷ 12
n = Remaining months on the loan
After reset:
New Rate = Index (SOFR) + Margin
Capped Rate = min(Initial Rate + Lifetime Cap, New Rate)
capped by Initial Cap at first reset
Payment recalculates on remaining balance with remaining term.
The key ARM mechanic: after the fixed period ends, the payment is recalculated on the current outstanding balance with the new rate spread over the remaining loan term. On a $400K, 30-year loan after 5 years, the new payment covers the remaining ~$366K balance over 25 years at the new rate.
Example
Jordan — Buying in Austin, TX with a 5/1 ARM
Jordan is buying a $500,000 home with 20% down ($100,000). Loan amount: $400,000. Lender offered a 5/1 ARM at 5.5% versus a 30-year fixed at 6.5%. The ARM has a 2/2/5 cap structure and a margin of 2.75%. Current SOFR: 4.3%.
Fixed period payment (years 1–5)
After reset scenarios (year 6+)
ARM vs Fixed total cost
Jordan plans to relocate in 6–7 years for work. The 5/1 ARM saves money during the fixed period and he expects to sell or refinance before the rate risk fully materializes. If Jordan stayed 30 years, the fixed loan would almost certainly cost less.