How the 5/1 ARM Calculator Works
We calculate your payment during the initial five-year fixed period and then simulate annual rate adjustments using your inputs (margin, index assumption, and rate caps). You’ll see a projected monthly payment after the first adjustment and a full amortization schedule that reflects your selections.
Inputs for the Calculator
- Home price, down payment (amount or %), and loan term
- Initial interest rate (fixed 5 years)
- ARM settings: margin, expected index path, initial/periodic/lifetime caps
- Taxes, insurance, and HOA (optional) for all-in monthly payment
Understanding Your 5/1 ARM Results
Review your initial monthly payment for the fixed period, projected post-adjustment payment, total interest, and amortization schedule. Use the charts to see how costs and balance change over time.
What Is a 5/1 ARM?
A 5/1 ARM has a fixed interest rate for five years, then adjusts annually. ARMs often start with lower rates than fixed mortgages but can rise later.
How ARM Rate Caps Work
Caps limit how much your rate can change: an initial cap (first reset), a periodic cap (each subsequent reset), and a lifetime cap (overall max).
5/1 ARM vs. 30-Year Fixed
ARMs can offer a lower payment in the early years while fixed loans provide long-term stability. Use the calculator to see which path better fits your plans.
Tip: If you plan to sell or refinance within ~5–7 years, the ARM’s savings during the fixed window may outweigh later adjustments.
Frequently Asked Questions
How are ARM adjustments calculated?
New rate ≈ index + margin, subject to periodic and lifetime caps. Lenders use published index values at your adjustment date.
Can I refinance before rates rise?
Yes. Many borrowers refinance during the fixed period or before a rate reset.