ARM Mortgage Calculator – Adjustable Rate Mortgage Calculator


ARM Mortgage Calculator - Adjustable Rate Mortgage Calculator

This ARM mortgage calculator compares an adjustable rate mortgage to a fixed rate mortgage (side-by-side) so you can make a smart loan decision.

It assumes interest rates will be increased on the ARM at the maximum allowed rate providing you with the most conservative outlook. It also includes a printable comparison page with complete amortization schedule for handy reference.

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Loan Information
Mortgage amount:
Mortgage loan term:
Maximum adjustment (%):
Fixed Rate Mortgage
Fixed interest rate (%):
Fully Amortized Adjustable Rate Mortgage
Beginning interest rate (%):
Number of months before first rate adjustment:
Interest rate cap (%):
Comparison Results Fixed ARM
Beginning principal and interest payment:
Total of payments:
Total interest:
Maximum monthly payment:

Adjustable-Rate Mortgages Vs. Fixed-Rate Mortgages

Everyone wants a low interest rate.

Some interest rates, though, seem too good to be true.

If you’re skeptical about certain advertised interest rates, it’s smart to follow through on your gut feeling and dig deeper into the terms of the loan. You might find that those low interest rate loans are adjustable-rate mortgages.

But adjustable-rate mortgages (ARMs) have their pros and cons, so how do you know which type of loan is right for you?

Compare ARMs side-by-side with fixed-rate mortgages and use our ARM Mortgage Calculator. Quickly discover the maximum monthly payment, total interest, and more information for each type of mortgage. When you’re done, print out a comparison report and amortization schedule.

Learn more about adjustable-rate mortgages and make the best choice for your financial situation . . . .

What Is An Adjustable-Rate Mortgage?

An adjustable-rate mortgage is a mortgage whose interest rate is adjusted periodically to reflect market conditions. They are designed to transfer a degree of risk from the lender to the borrower. Should market conditions (the cost to the lender when borrowing on the credit markets) change, the lender will be able to raise interest rates on their customers at predetermined intervals (usually once per year) by a certain percentage.

ARMs have several unique features including but not limited to:

  • An initial interest rate – This is the interest rate at the beginning of the ARM, which is typically lower than interest rates of competing fixed-rate mortgages.
  • A margin – This is a number of percentage points that the lender adds to the index rate which will result in the adjustable-rate mortgage’s interest rate.
  • An index rate – Many lenders base ARM interest rates off of an index, commonly on those of Treasury securities.
  • Interest rate caps – Thankfully, there are limits on how high ARM interest rates can rise each year and over the life of the loan.
  • An adjustment period – This is a period of time when the interest rate remains unchanged.

Additionally, ARMs can have special conditions such as initial discounts, negative amortization when mortgage payments are too small and there’s not enough money to pay the interest at the beginning of the loan, future conversion to fixed-rate mortgage requirements, or prepayment requirements.

Some of these features can be desirable, but not all. Let’s take a closer look at more specific adjustable-rate mortgage pros and cons.

Adjustable-Rate Mortgage Pros And Cons

Adjustable-rate mortgages have their share of advantages and disadvantages – including non-financial consequences. Take a look:


  • Lower initial interest rates compared to fixed-rate mortgages – Lower rates mean you will have an opportunity to increase your savings.
  • There’s a possibility that interest rates can drop further – The interest rate depends on market performance, so if market rates fall, your interest rate will also drop. It’s more likely to happen if you start your adjustable-rate mortgage when interest rates are high.
  • If you don’t have plans to stay in your house for a long time, then an ARM might work out best – You can save money if you sell it before the interest rate rises.
  • Adjustable-rate mortgages have interest rate caps, which limits both how quickly the interest rate can rise and how far it can go up – This allows you to calculate the “worst-case scenario” using the ARM Mortgage Calculator.


  • Interest rates rise when market rates increase – Most homebuyers worry if the interest rates are very low because it could mean interest rates can only rise. If this happens, they would need to adjust their household budget so they can cope up with their monthly mortgage payments.
  • There can be special conditions that affect how much you pay – Most ARMs today are pretty straightforward, but beware of conversion or prepayment requirements.
  • The first interest rate adjustment might not be limited by the cap – This forces you to pay not only more, but more suddenly.
  • Adjustable-rate mortgages can cause stress – If you are struggling with your current financial situation, it is not advisable to get an adjustable-rate mortgage. It will just add to your struggles if the interest rate soars high and you don’t know where to get additional money to make your monthly payments.


Adjustable-rate mortgages are not for everyone. Before making a decision, it is essential to do your research and compare loan options.

Just like any other long-term loan, plan for the future. If you are looking at living in the home for a short period of time, an adjustable-rate mortgage may be the best option for you. But if you are planning to live in the home for a longer period of time, you are probably better off with a fixed-rate mortgage.

Try out the ARM Mortgage Calculator and start your research today!

ARM Mortgage Calculator Terms & Definitions

  • Mortgage – The charging of real (or personal) property by a debtor to a creditor as security for a debt (esp. one incurred by the purchase of the property), on the condition that it shall be returned on payment of the debt within a certain period.
  • Adjustable-Rate Mortgage (ARM) – A mortgage whose interest rate is adjusted periodically to reflect market conditions.
  • Initial Interest Rate – The rate you pay when you first get your loan. (On an adjustable-rate mortgage, this rate may be for five years or only for the first month.)
  • Margin – This is a number of percentage points that the lender adds to the index rate which will result in the adjustable-rate mortgage’s interest rate.
  • Indexed Rate – An interest rate charged on loans to the borrower that is calculated by taking the sum of a benchmark index interest rate and a specified margin. The indexed rate is used to calculate the interest rate on an adjustable-rate mortgage (ARM).
  • Adjustment Period – The period that elapses between the adjustment dates for an adjustable-rate mortgage.
  • Fixed-Rate Mortgage – A mortgage whose interest rate does not adjust during the loan term.
  • Maximum Adjustment – The highest amount an interest rate can adjust per year.
  • Loan Term – Period over which a loan agreement is in force.
  • Interest Rate – An interest rate is the rate at which interest is paid by a borrower for the use of money that they borrow from a lender.
  • Fixed Interest Rate – The interest rate of the fixed-rate mortgage which will remain the same over the loan term.
  • Interest Rate Cap – The interest rate limit set for adjustable-rate mortgages (can also refer to the annual increase or decrease limits).
  • Interest – Money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt.
  • Principal – Denoting an original sum lent.
  • Refinance – Financing something – like a mortgage – again, typically with a new loan at a lower rate of interest.
  • Amortization – The spreading of payments over multiple periods.

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