- Adjustable rate mortgage (ARM)
- This calculator shows a "fully amortizing" ARM, which is the most common type of ARM. The monthly payment is calculated to pay off the entire mortgage balance at the end of a 30-year term. After the initial period, the interest rate and monthly payment adjust at the frequency specified. The amount an ARM can adjust each year, and over the life of the loan, are typically capped. Below is a list of common ARMs.
| 10/1 ARM | Fixed for 120 months, adjusts annually for the remaining term of the loan. |
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| 7/1 ARM | Fixed for 84 months, adjusts annually for the remaining term of the loan. |
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| 5/1 ARM | Fixed for 60 months, adjusts annually for the remaining term of the loan. |
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| 3/1 ARM | Fixed for 36 months, adjusts annually for the remaining term of the loan. |
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| 10/6 month ARM | Fixed for 120 months, adjusts every six months for the remaining term of the loan. |
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| 7/6 month ARM | Fixed for 84 months, adjusts every six months for the remaining term of the loan. |
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| 5/6 month ARM | Fixed for 60 months, adjusts every six months for the remaining term of the loan. |
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| 3/6 month ARM | Fixed for 36 months, adjusts every six months for the remaining term of the loan. |
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- Mortgage amount
- Original or expected balance for your mortgage.
- Initial interest rate
- Initial annual interest rate for this mortgage. Please note that the interest rate is different from the Annual Percentage Rate (APR), which includes other expenses such as mortgage insurance, and the origination fee and or point(s), which were paid when the mortgage was first originated. The APR is normally higher than the simple interest rate.
- Term in years
- The number of years over which you will repay this loan. The most common mortgage terms are 15 years and 30 years.
- Interest rate cap
- This is the highest allowable interest rate for your mortgage. Your interest rate will not be adjusted above this rate.
- Months before first adjustment
- The number of months that the interest rate is fixed. After this period, the interest rate will be subject to rate adjustments. If you enter zero in this field, the tool assumes that the rate will begin making adjustments immediately after the initial "months between adjustments" period has passed. If any number other than zero is entered, the first adjustment will take place at that time, and adjustments will happen at the frequency entered in the "months between adjustments" field.
- Expected adjustment
- The amount you believe that your mortgage's interest rate will change. This amount will be added to or subtracted from your interest rate.
- Months between adjustments
- The number of payment periods between potential adjustments to your interest rate. The most common is 12 months, which means your payment could change at most once per year. Loans using the SOFR benchmark have six months between adjustments. The SOFR benchmark is based on what U.S. financial institutions pay each other for overnight loans. It is often used as a replacement for the LIBOR benchmark which is no longer used.
- Initial monthly payment
- Monthly principal and interest payment (PI) based on your beginning balance and initial interest rate.
- Total payments
- Total of all monthly payments over the full term of the mortgage. This total payment amount assumes that there are no prepayments of principal.
- Total interest
- Total of all interest paid over the full term of the mortgage. This total interest amount assumes that there are no prepayments of principal.
