Payments and schedules
Adjustable Rate Mortgage Calculator: Worst-Case ARM Payment
An ARM starts with a fixed rate, then adjusts. See your starting payment, the payment after the first change and the most you could pay if the rate rises as far as its caps allow.
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ARM payment
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In plain words
A $400,000 ARM starting at 6.9% costs $2,634 a month in principal and interest for the first 5 years. In the worst case the rate could rise to 8.9% at the first adjustment, making the payment $3,131, and to 11.9% at most, making it $3,899.
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Key figures
- Starting monthly payment$2,634
- Payment after the first adjustment (worst case)$3,131
- Highest possible payment (at the lifetime cap)$3,899
- Fixed-rate payment$2,770
- Worst-case increase$1,264
- Highest rate allowed (lifetime cap)11.9%
- ARM worst case
- Fixed-rate payment
View chart as table
| Year | ARM worst case | Fixed-rate payment |
|---|---|---|
| Year 1 | $2,634 | $2,770 |
| Year 2 | $2,634 | $2,770 |
| Year 3 | $2,634 | $2,770 |
| Year 4 | $2,634 | $2,770 |
| Year 5 | $2,634 | $2,770 |
| Year 6 | $3,131 | $2,770 |
| Year 7 | $3,385 | $2,770 |
| Year 8 | $3,642 | $2,770 |
| Year 9 | $3,899 | $2,770 |
| Year 10 | $3,899 | $2,770 |
| Year 11 | $3,899 | $2,770 |
| Year 12 | $3,899 | $2,770 |
| Year 13 | $3,899 | $2,770 |
| Year 14 | $3,899 | $2,770 |
| Year 15 | $3,899 | $2,770 |
| Year 16 | $3,899 | $2,770 |
| Year 17 | $3,899 | $2,770 |
| Year 18 | $3,899 | $2,770 |
| Year 19 | $3,899 | $2,770 |
| Year 20 | $3,899 | $2,770 |
| Year 21 | $3,899 | $2,770 |
| Year 22 | $3,899 | $2,770 |
| Year 23 | $3,899 | $2,770 |
| Year 24 | $3,899 | $2,770 |
| Year 25 | $3,899 | $2,770 |
| Year 26 | $3,899 | $2,770 |
| Year 27 | $3,899 | $2,770 |
| Year 28 | $3,899 | $2,770 |
| Year 29 | $3,899 | $2,770 |
| Year 30 | $3,899 | $2,770 |
Compare scenarios
| Scenario | Monthly payment | Total paid |
|---|---|---|
| ARM, worst case | $3,899 | $1,309,170 |
| ARM, rate never changes | $2,634 | $948,384 |
| Fixed-rate loan | $2,770 | $997,027 |
| Difference: ARM, rate never changes | −$1,264 | −$360,786 |
| Difference: Fixed-rate loan | −$1,129 | −$312,143 |
Year by year
| Year | Rate | Payment (P&I + extra) | Fixed-rate payment |
|---|---|---|---|
| Year 1 | 6.9% | $2,634 | $2,770 |
| Year 2 | 6.9% | $2,634 | $2,770 |
| Year 3 | 6.9% | $2,634 | $2,770 |
| Year 4 | 6.9% | $2,634 | $2,770 |
| Year 5 | 6.9% | $2,634 | $2,770 |
| Year 6 | 8.9% | $3,131 | $2,770 |
| Year 7 | 9.9% | $3,385 | $2,770 |
| Year 8 | 10.9% | $3,642 | $2,770 |
| Year 9 | 11.9% | $3,899 | $2,770 |
| Year 10 | 11.9% | $3,899 | $2,770 |
| Year 11 | 11.9% | $3,899 | $2,770 |
| Year 12 | 11.9% | $3,899 | $2,770 |
| Year 13 | 11.9% | $3,899 | $2,770 |
| Year 14 | 11.9% | $3,899 | $2,770 |
| Year 15 | 11.9% | $3,899 | $2,770 |
| Year 16 | 11.9% | $3,899 | $2,770 |
| Year 17 | 11.9% | $3,899 | $2,770 |
| Year 18 | 11.9% | $3,899 | $2,770 |
| Year 19 | 11.9% | $3,899 | $2,770 |
| Year 20 | 11.9% | $3,899 | $2,770 |
| Year 21 | 11.9% | $3,899 | $2,770 |
| Year 22 | 11.9% | $3,899 | $2,770 |
| Year 23 | 11.9% | $3,899 | $2,770 |
| Year 24 | 11.9% | $3,899 | $2,770 |
| Year 25 | 11.9% | $3,899 | $2,770 |
| Year 26 | 11.9% | $3,899 | $2,770 |
| Year 27 | 11.9% | $3,899 | $2,770 |
| Year 28 | 11.9% | $3,899 | $2,770 |
| Year 29 | 11.9% | $3,899 | $2,770 |
| Year 30 | 11.9% | $3,899 | $2,770 |
How to use this calculator
- Enter the loan amount and the starting ARM rate from your lender.
- Choose the fixed-rate period, such as 5 years for a 5/1 or 5/6 ARM.
- Enter the three rate caps from the loan's cap structure, for example 2, 1 and 5.
- Read the starting payment, the worst case after the first adjustment and the highest possible payment.
- Check whether you could afford the highest payment before choosing an ARM.
An adjustable-rate mortgage (ARM) often starts with a lower rate than a 30-year fixed loan, but that rate is only fixed for a few years. After that it can rise. The question is not what you pay now; it is what you could pay later. This adjustable rate mortgage calculator shows the starting payment and the worst case the loan’s caps allow, so you can decide with the risk in plain view.
How this adjustable rate mortgage calculator works
The calculator runs the loan in three stages:
- Starting payment. It works out principal and interest over 30 years at the starting rate, with the
standard formula:
M = P × r ÷ (1 − (1 + r)^−n). - First adjustment. At the end of the fixed period it finds the remaining balance, raises the rate by the first cap, and recalculates the payment over the years left.
- Highest payment. It keeps raising the rate by the later cap once a year until it reaches the lifetime cap, recalculating the payment on the remaining balance each time.
Highest rate = starting rate + lifetime cap
This is a worst-case path: the rate rises the full amount at every adjustment.
Worked examples
Example 1: a 5-year ARM with 2/1/5 caps
A buyer takes a $400,000 ARM at an assumed 6.0% starting rate, fixed for 5 years, with 2/1/5 caps.
- Starting payment: about $2,398 a month for the first 60 payments.
- Balance after 5 years: about $372,217.
- First adjustment: the rate can rise at most 2 points, to 8%. Payment on the remaining balance over 25 years: about $2,873.
- Later adjustments: 9%, then 10%, then 11%, the lifetime cap (6% + 5). The rate can reach it in year 9, when the payment would be about $3,611.
In the worst case, the payment rises by about $1,213 a month, roughly 51%.
Example 2: a 7-year ARM with different caps
Now take the same loan and rate, fixed for 7 years.
- With 2/1/5 caps, the payment can rise from about $2,398 to about $2,845 at the first reset (8%) and reach about $3,534 at 11% in year 11.
- With 5/1/5 caps, the first reset can jump straight to the lifetime cap of 11%, taking the payment to about $3,575 in year 8.
A higher first cap means the full shock can arrive all at once. Always check the first number in the cap structure.
What your result means
The figure that matters most is the highest possible payment. Ask yourself whether you could pay it, together with taxes and insurance, without hardship. If the answer is no, an ARM is a bet that you will sell or refinance in time, and neither is guaranteed: home values can fall and rates can rise.
| Payment | What to check |
|---|---|
| Starting payment | Fits your budget comfortably |
| After first adjustment | You could still pay it if plans change |
| Highest possible | Could you survive it for several years? |
Enter the highest payment plus taxes and insurance in the debt-to-income calculator to see how it would affect your ratio.
Program rules that change the answer
| Feature | Common setup | Why it matters |
|---|---|---|
| Fixed period | 3, 5, 7 or 10 years | Longer fixed periods give more time before any change |
| Index | Often SOFR; Fannie Mae ARM plans use a 30-day average of SOFR | The index plus a margin sets each new rate |
| Adjustment frequency | Every 6 or 12 months after the fixed period | More frequent resets can reach the cap sooner |
| Caps | Lifetime and per-adjustment limits on every Fannie Mae plan; for example 2/1/5 or 5/1/5 | Set the worst case |
| Qualifying | Lenders may qualify you at a rate above the starting rate | Protects against payment shock |
FHA and VA also offer ARMs with their own cap rules. Federal Qualified Mortgage rules require lenders to consider the highest payment in the first five years when they judge whether you can repay.
Assumptions
- A 30-year term; the payment is recalculated after each adjustment so the loan still pays off on time.
- After the first adjustment, the rate rises once a year by the later cap until it hits the lifetime cap.
- No rate floors, index declines or interest-only periods are modeled.
- Taxes, insurance and mortgage insurance are not included.
Common mistakes
- Budgeting on the starting payment only. It is the best case, not the expected one.
- Ignoring the first cap. A 5-point first cap can bring the full increase at the first reset.
- Counting on a refinance. It depends on future rates, your credit and your home’s value.
- Mixing up 5/1 and 5/6. Both are fixed for 5 years; the second number is how often the rate resets (yearly or every six months).
Limits of this estimate
Your real payments depend on the index, margin, caps, floor and adjustment schedule in your loan documents. The lender’s Loan Estimate shows the highest payment the loan can reach; compare it with this result. To compare with a fixed-rate loan, use the mortgage payment calculator, and read the types of mortgage loans guide for a side-by-side look at fixed and adjustable loans. Jumbo borrowers often see ARM offers; our jumbo loan guide covers them.
For context, the national average 30-year fixed rate was 7.40% as of October 15, 2026 (Freddie Mac). FHA, VA and USDA rates are set by each lender and often differ.Source: Freddie Mac Primary Mortgage Market Survey, via FRED
Frequently asked questions
How does an adjustable-rate mortgage work?
An ARM has a fixed rate for an opening period, often 3, 5, 7 or 10 years. After that the rate resets on a schedule to an index plus a margin, within limits called caps. Your payment can go up or down at each reset.
What do ARM caps like 2/1/5 mean?
The first number limits the rise at the first adjustment, the second limits each later adjustment, and the third limits the total rise over the life of the loan. With a 6% start, 2/1/5 caps allow 8% at the first reset and never more than 11%.
Is this the payment I will actually pay?
Not necessarily. It is the worst case, where the rate rises as much as the caps allow at every step. If the index stays flat or falls, your payment could stay the same or drop.
What index do ARMs use now?
Many ARMs today use the Secured Overnight Financing Rate (SOFR). Fannie Mae requires its ARM plans to be tied to a 30-day average of SOFR. Your loan documents name the index and margin.
How often does an ARM adjust after the fixed period?
It depends on the loan. Some adjust once a year and many newer ARMs adjust every six months. This calculator applies the later cap once a year, so a six-month ARM could reach its highest rate sooner.
When does an ARM make sense?
An ARM can make sense if you are fairly sure you will sell or refinance before the fixed period ends, and you could still afford the worst-case payment if plans change. Refinancing is never guaranteed.
Can the rate go below the starting rate?
Sometimes. Many ARMs set a floor, often the margin or the starting rate. Check the floor in your loan disclosure.
Sources
Read the guides
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