Skip to content

    Under active development. New calculators and features ship every week. Everything currently runs free while the site matures — pricing pages are a preview, checkout is not open yet.

    Search ⌘K
    Calculates locally in your browser · teaser, reset and ceiling
    Mortgage / adjustable rate

    ARM calculator

    An adjustable-rate mortgage trades a lower initial payment for the risk of a reset. This calculator shows the teaser payment, the payment after the first capped adjustment, and the lifetime ceiling, so the discount can be weighed against what happens when it expires.

    Fixed5 yrFully indexed9.50%Cap2.0 pp
    Initial payment
    $2,271
    Fixed for 5 years at 5.50%
    First reset payment
    $2,956
    At 7.50% after the cap
    Maximum payment
    $3,777
    Lifetime ceiling 10.50%
    Payment jump
    30%
    At the first reset, before further adjustments
    Rate scenarios
    What the payment becomes if the index moves at the first reset.
    30-year term
    Rate scenarios
    ScenarioRatePayment
    Initial (teaser)5.50%$2,271
    First reset, capped7.50%$2,956
    Fully indexed now9.50%$2,956
    Lifetime ceiling10.50%$3,777

    The first reset is capped by the periodic cap, not by the fully indexed rate.

    Inspect the model
    Choose a quick result view, a scaled comparison, or the complete diagnostic set.
    Reset payment against the index
    The periodic cap flattens the left of the curve; the lifetime cap flattens the right.
    Reset payment against the index$0$662$1.3k$2.0k$2.6k$3.3k2.8%2.8%3.6%3.6%4.5%4.5%5.3%5.3%6.2%6.2%7.0%7.0%7.8%7.8%8.7%8.7%9.5%9.5%10.4%10.4%11.2%11.2%Payment
    Payment at each stage
    Teaser, first reset and the lifetime ceiling.
    Payment at each stage$0$891$1.8k$2.7k$3.6k$4.5k$2.3kInitialInitial$3.0kFirst resetFirst reset$3.8kCeilingCeilingMonthly
    Canonical equations
    The exact relationships implemented by this engine.

    index + margin · The rate the loan wants to charge once the fixed period ends.

    min(fully indexed, initial + periodic cap, initial + lifetime cap) · Caps apply in that order.

    M = P·i/(1 − (1+i)⁻ⁿ) · Re-amortised over the remaining term at each reset.

    finance methodology

    A clear path from inputs to results.

    An adjustable-rate mortgage trades a lower initial payment for the risk of a reset. This calculator shows the teaser payment, the payment after the first capped adjustment and the lifetime ceiling, so the discount can be weighed against what happens when it expires.

    Step-by-step methodWorked exampleAssumptions explained

    How to use

    1. Enter the loan amount and the teaser rate.
    2. Set the index and margin that will price the first reset.
    3. Choose the fixed period and the caps.
    4. Compare the initial, reset and maximum payments.

    The formula

    rreset=min⁡(i+m,  r0+capperiodic,  r0+caplife)r_{reset} = \min(i + m,\; r_0 + cap_{periodic},\; r_0 + cap_{life})

    Reference: Regulation Z (12 CFR §1026.20) adjustable-rate reset: index plus margin, periodic and lifetime caps.

    Worked example

    $400,000, 5.5% for 5 years, index 7.0%, margin 2.5%

    Inputs
    • Loan $400,000.
    • Teaser 5.5% for 5 years.
    • Index 7.0%, margin 2.5%.
    • Periodic cap 2%, lifetime cap 5%.
    Calculation path
    1. 1

      Fully indexed rate: 7.0% + 2.5% = 9.5%.

    2. 2

      First reset is capped at 5.5% + 2% = 7.5%.

    3. 3

      Initial payment: $2,271.16.

    4. 4

      Reset payment over the remaining 25 years: $2,955.96.

    5. 5

      Lifetime ceiling 10.5% gives $3,776.73.

    Result

    Initial $2,271 → reset $2,956 → ceiling $3,777.

    Interpreting the result

    The teaser is a discount you repay at the first reset. Notice that the cap, not the index, sets the first adjustment: the loan wants 9.5% but may only take 7.5%. That protection is temporary — subsequent resets keep climbing until the lifetime cap.

    Assumptions & limitations

    • The index holds at the entered value at the first reset.
    • The loan re-amortises over the remaining term at each adjustment.
    • No prepayment penalty, and taxes and insurance are excluded.

    Frequently asked questions

    Is the first reset always the fully indexed rate?

    No. The periodic cap usually limits it. The loan moves toward the indexed rate over several adjustments.

    Should I take the ARM if I plan to move?

    If you will sell before the fixed period ends, the teaser is genuinely cheaper. The risk starts at the first reset.

    What is a 5/1 ARM?

    Five years fixed, then adjusting every one year. The engine models the fixed period and the first reset.

    Methodology last reviewed 2026-10-21. Results are informational and not financial or engineering advice — see our disclaimer.