ARM guide
Adjustable-Rate Mortgage Calculator
Estimate your next ARM rate and monthly payment using the index, margin, adjustment caps, lifetime cap, loan balance and remaining term. Compare the reset payment with refinancing.
The ARM reset formula
The fully indexed rate starts with the index plus the lender's margin. The calculator then applies the initial or subsequent adjustment cap and the lifetime cap or floor stated in your loan documents.
Fully indexed rate = index + margin
ARM terms explained
- Index
- A market benchmark that can change over time. Many newer ARMs use a SOFR-based index.
- Margin
- The lender's fixed spread added to the index after the initial rate period.
- Adjustment caps
- The initial cap limits the first change, the subsequent cap limits later periodic changes, and the lifetime cap limits the total increase above the initial rate.
- 5/6 or 5/1 ARM
- The first number is the initial fixed period in years. The second number describes how often the rate adjusts afterward.
ARM calculator questions
What does 5/6 ARM mean?
A 5/6 ARM typically has an initial fixed period of five years and then adjusts every six months. Confirm the exact schedule in your Loan Note or adjustment notice.
Can I compare an ARM reset with refinancing?
Yes. Enter the current balance, remaining term, expected reset terms, new loan rate, new term, and closing costs to compare the estimated payment paths.