Simple Mortgage Calculator

3 YR Adjustable Rate Mortgage (ARM) Calculator

Estimate your monthly payment during the first 3 years and project payments after the first reset

Our 3/1 ARM calculator helps you estimate payments for an adjustable-rate mortgage with a fixed interest rate for the first three years. After that, your rate can change annually subject to periodic and lifetime caps. Use the tool to compare your initial payment to post-reset projections, and understand how rate changes could affect your budget.

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Monthly payment breakdown (initial period)

Balance and costs over time (yearly)

Amortization schedule

Enter Property & Loan Details

Down payment

Results

Initial monthly (all-in)
$2,833.25
After 1st reset (proj.)
$3,171.96
After 1st reset (worst-cap)
$3,289.25
Taxes / mo
$450.00
Insurance / mo
$116.67
HOA / mo
$50.00
PMI / mo
Not required
Loan amount
$360,000.00
Down payment
$90,000.00
Total interest (life)
$764,371.27

What is a 3/1 ARM?

A 3/1 ARM is an adjustable-rate mortgage with a fixed interest rate for the first three years. After that, your rate can reset once per year based on a benchmark index plus a lender margin, subject to periodic and lifetime caps. ARMs often start with lower initial rates than fixed loans, but future payments can rise or fall after the fixed period.

How Our 3/1 ARM Calculator Works

The calculator models your fixed period (first 36 months) with your initial APR, then simulates annual adjustments using your assumed index path and margin, respecting the periodic (per-adjustment) cap and lifetime cap. Results show initial payment, first reset projection, worst-case capped projection, total interest, and a year-by-year view.

Inputs for the 3/1 ARM Calculator

  • Home price, down payment (percent or dollars), and loan term (typically 30 years)
  • Initial APR (fixed for 3 years)
  • Index & margin for adjustments, assumed annual index change
  • Initial, periodic, and lifetime caps
  • Property taxes, homeowners insurance, HOA, and optional PMI

Understanding Your Results

  • Initial (Years 0–3): Your P&I and all-in monthly payment
  • After First Reset: Projected new payment using your index + margin (within caps)
  • Worst-Case Capped: Payment if the rate hits the cap path
  • Total Interest: Sum of interest across the full term based on your assumptions
  • Amortization: Annual breakdown of principal, interest, taxes/fees, and balance

What Affects Your 3/1 ARM Rate?

ARMs track an index (e.g., SOFR/Prime) plus a margin. Lender caps limit how much your APR can rise at each adjustment and over the loan’s life. Your credit profile, LTV, points, and market conditions also influence pricing.

Pros and Cons of a 3/1 ARM

Pros

  • Lower initial rate vs many fixed loans
  • Potential savings if you sell/refi before resets matter

Cons

  • Payment uncertainty after year 3
  • Possible payment shock if rates rise quickly

3/1 ARM vs. Fixed-Rate Mortgage

ARMs can shine for shorter horizons; fixed loans provide long-term stability. Use our ARM vs. Fixed Calculator for a full side-by-side.

Frequently Asked Questions

How do caps work on a 3/1 ARM?

The first adjustment is limited by an initial cap (e.g., +2.0%). Later resets are limited by a periodic cap (e.g., +1.0% each year) and a lifetime cap (e.g., +5.0% above start).

Can I refinance out of an ARM?

Yes. If rates or your plans change, you can refinance into a fixed loan (subject to qualification and costs).