PFCHow to use this calculator
An adjustable-rate mortgage starts with a fixed interest rate for a stated period. Later, the rate can change at scheduled intervals. This calculator models one possible rate path so you can see how resets affect monthly payments.
- Select ARM and enter the initial loan amount, rate, and total term.
- Set the initial fixed period and reset interval in months. For example, a 5/6 ARM uses 60 fixed months and a six-month reset interval.
- Enter a projected index, lender margin, rate caps, and rate floor. Review the payment and interest-rate columns in the schedule.
Illustrative example
For a $250,000.00 loan over 30 years at 6.5% initially, the initial monthly principal-and-interest payment is $1,580.17. With the default ARM assumptions, the payment at the first reset is $1,616.92.
These example values are for explanation. They are not current market quotes or personalized recommendations.
Calculation method
At each reset, the projected index plus the lender margin determines a target rate. The first-adjustment cap, later-adjustment cap, lifetime upper cap, and minimum rate constrain that target. The payment is then recalculated using the remaining loan balance and remaining term.
Assumptions and limitations
Monthly principal and interest, rounded to cents. Excludes taxes, insurance, fees, and penalties; the last installment absorbs rounding. Extra principal is paid every month. For an ARM, the first reset is after the fixed period; each reset uses the projected index plus margin, subject to symmetric adjustment caps, a lifetime upper cap, and a floor. Payments are recalculated over the remaining term. Extra-payment savings use the same rate scenario with no extra payments. This is a scenario, not a prediction; lender-specific rounding, lookback rules, interest-only periods, and payment caps are not modeled.
Sources
ARM mortgage calculator FAQs
Choose a question to read the answer, then try your own numbers in the free calculator.
How is ARM calculated?
This ARM calculator first calculates payments using the initial rate. At each scheduled reset, it adds the projected index to the lender margin, applies the entered adjustment caps and rate floor, then recalculates the payment using the remaining balance and remaining term. The schedule shows the resulting rates and payments.
What is the difference between a 5/1 ARM and a 5/6 ARM?
Both start with a five-year fixed period. After that, a 5/1 ARM typically adjusts once a year, while a 5/6 ARM typically adjusts every six months. Enter 60 fixed months and either 12 or 6 reset months to model those schedules, and check the actual loan terms.
Are these future rates guaranteed?
No. The index and changes between resets are assumptions you choose. They are not live rates or a forecast.
What does a 2/2/5 cap mean?
In this model, the first reset can move at most two percentage points, subsequent resets can move at most two, and the rate cannot rise more than five percentage points above the initial rate. Contract terms may differ.
When does the first reset happen?
A 60-month fixed period means the first 60 payments use the initial rate. The first recalculated payment is payment 61, unless the loan has already been repaid.
PFC provides mathematical planning estimates. Tax and retirement rules in these tools are for 2026 and do not update automatically. Check the cited sources and the terms that apply to your situation.