ARM Mortgage Calculator — 5/6, 7/6, 10/6 Adjustable Rate 2026
Adjustable-rate mortgage payments: the intro payment, balance at the first reset, expected payment from index plus margin, first-reset and lifetime-cap worst cases, and the saving versus a 30-year fixed loan.
| Balance at the end of the fixed period | — |
|---|---|
| Expected rate after reset (index + margin, capped) | — |
| Expected payment after reset | — |
| Worst case — first reset at the cap | — |
| Worst case — lifetime cap | — |
| Saving vs 30-year fixed during the fixed period | — |
| Break-even: resets needed to lose that saving (worst case) | — |
| Total interest — expected path vs fixed | — |
In short
An adjustable-rate mortgage keeps its intro rate for 3–10 years, then resets (usually every six months) to the SOFR index plus a margin, limited by initial, periodic and lifetime caps such as 2/1/5; on a $400,000 5/6 ARM at 5.75% the payment is $2,334 for five years, about $2,448 after a reset at 6.25%, and at most $3,570 at the 10.75% lifetime cap — a worst case that wipes out the $11,639 intro saving over a 6.5% fixed loan in about a year.
Who this is for: Buyers choosing between an ARM and a fixed mortgage, current ARM holders approaching their first reset, and anyone sizing the worst case before signing.
How an adjustable-rate mortgage adjusts
An ARM has a fixed introductory rate for 3, 5, 7 or 10 years, usually below the 30-year fixed rate. After that it resets — every six months on most current loans — to the index (30-day average SOFR for conforming loans) plus a margin fixed in your contract, typically 2.5–3%. Three caps limit the damage: the initial cap on the first reset (often 2% or 5%), the periodic cap on each later reset (1–2%) and the lifetime cap above the start rate (usually 5%). A "5/6 ARM with 2/1/5 caps" means five fixed years, six-monthly resets, 2% first, 1% thereafter, 5% lifetime.
At each reset the payment is recalculated to amortise the remaining balance over the remaining term, so a 5/6 ARM at year five re-amortises over 25 years. The calculator shows the balance at reset, the expected payment from your index assumption, the first-reset and lifetime worst cases, the saving the lower intro rate gives you versus a fixed loan, and how many months of worst-case payments would wipe that saving out.
See also: Mortgage Payment Calculator (PITI), 15-Year vs 30-Year Mortgage Calculator, Jumbo vs Conforming Loan Calculator 2026.
Assumptions
- Fully amortising ARM: intro payment over the full term; balance at the end of the fixed period from the amortisation formula; later payments re-amortise the balance over the remaining term.
- Expected reset rate = index + margin, bounded by the initial cap above or below the start rate and by the lifetime cap; worst case assumes every reset hits its cap.
- One annual reset is assumed to reach the expected rate; six-monthly resets reach it sooner but the payment arithmetic is the same.
- Comparison fixed loan has the same amount and term; no closing costs on either.
Worked example
Intro payment $2,334; balance after 5 years $371,049. Full index + margin = 6.25%, within the 2% initial cap → expected payment $2,448 over the remaining 25 years. First-reset worst case 7.75% → $2,803; lifetime cap 10.75% → $3,570, reachable after 4 resets. Versus the fixed loan's $2,528, the intro period saves $11,639; at the lifetime-cap payment that saving is gone in about 12 months.
Frequently asked questions
What does 5/6 or 7/1 mean?
The first number is the fixed years; the second is how often the rate resets afterwards — every 6 months (5/6) or every year (7/1).
What is the index on a 2026 ARM?
Almost all use the 30-day average SOFR (LIBOR ended in 2023); some portfolio and jumbo ARMs use the 1-year Treasury.
Can the rate go down?
Yes — if the index falls, subject to the same caps and never below the margin (some loans set a floor equal to the start rate).
Is an ARM cheaper than a fixed mortgage?
During the fixed period, usually by 0.5–1 percentage point. After that it depends entirely on the index; the lifetime-cap row shows the ceiling.
Can I refinance an ARM before it resets?
Yes, if you qualify and rates allow; most conforming ARMs have no prepayment penalty. Plan it a year before the first reset.
What about interest-only ARMs?
Those pay no principal in the fixed period, so the balance at reset is the full loan and the re-amortised payment jumps more; this calculator assumes a fully amortising ARM.
Do jumbo loans use ARMs more?
Yes — 7/6 and 10/6 jumbo ARMs are common because lenders keep them on their books; caps and margins are often looser, so read the note.
What happens to escrow at a reset?
Nothing directly; only the principal-and-interest part changes. Taxes and insurance adjust on their own annual schedule.
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