How to use this calculator
An ARM can make sense when the initial rate savings are meaningful and you expect to sell or refinance before the adjustment period. A fixed-rate mortgage is simpler and more predictable because the principal and interest payment does not change over the term.
ARM loans have an initial fixed period — commonly 5 or 7 years. The second number says how often the rate can move afterwards: yearly on a 5/1 or 7/1, every six months on a 5/6 or 7/6. After the fixed period the rate adjusts based on an index such as SOFR plus a margin, subject to caps that limit how much it can change at the first adjustment, at each later one, and over the life of the loan.
This calculator splits the loan into the two periods that matter: what the ARM payment is and what it saves you during the fixed years, then what the payment becomes at the first adjustment and what the remaining years cost. The right answer depends on timeline, payment comfort, refinance flexibility, and risk tolerance.
For illustration purposes only. Not a rate quote, loan offer, or commitment to lend. Contact us for a personalized quote.