Adjustable-rate mortgage (ARM): This adjustable-rate mortgage calculator shows a fully amortizing ARM, the most common type of ARM. The monthly payment is calculated to pay off the entire mortgage balance at the end of the term. The term is typically 30 years. After any fixed interest rate period has passed, the interest rate and payment adjusts at the frequency specified. A fully-amortizing ARM will also have a maximum rate that it will not exceed. Below is a list of the most common types of fully-amortizing ARMs.
| Common adjustable-rate mortgages |
|---|
| ARM type |
Months fixed |
| 10/1 ARM | Fixed for 120 months, adjusts annually for the remaining term of the loan. |
| 7/1 ARM | Fixed for 84 months, adjusts annually for the remaining term of the loan. |
| 5/1 ARM | Fixed for 60 months, adjusts annually for the remaining term of the loan. |
| 3/1 ARM | Fixed for 36 months, adjusts annually for the remaining term of the loan. |
Mortgage amount: Original or expected balance for your mortgage.
Starting interest rate: Initial annual interest rate for this mortgage.
Term in years: The number of years over which you will repay this loan. The most common mortgage terms are 15 years and 30 years.
Interest rate cap: This is the highest interest rate allowed by your mortgage. Your actual interest rate will not be adjusted above this rate.
Months before first adjustment: This is the number of months that the interest rate is fixed. After this period, the interest rate will be subject to rate adjustments. If you enter zero in this field, we assume that the rate will begin making adjustments after the initial period of time between adjustments has passed. If any number other than zero is entered, the first adjustment will take place at that time, and adjustments will happen at the frequency entered in the "months between adjustments" field.
Expected adjustment: The amount you believe that your mortgage's interest rate will change. This amount will be added to or subtracted from your interest rate.
Months between adjustments: The number of payment periods between potential adjustments to your interest rate. The most common is 12 months, which means your payment could change, at most, once per year.
Starting monthly payment: Monthly principal and interest payment, or PI, based on your beginning balance and starting interest rate.
Total payments: Total of all monthly payments over the full term of the mortgage. This total payment amount assumes that there are no prepayments of principal.
Total interest: Total of all interest paid over the full term of the mortgage. This total interest amount assumes that there are no prepayments of principal.
Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regard to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
