Calculator

Adjustable-rate mortgage (ARM) calculator

An ARM opens with a low fixed rate, then resets to whatever the market dictates. This calculator shows both the comfortable intro payment and the jump you'd face once that period ends.

Inputs

Loan amount

Loan term (years)

Initial rate

Initial fixed period (years)

Estimated rate after adjustment

Estimates only. Adjust any value to recalculate instantly.

Results

Initial monthly payment $1,816.92 adjusts to $2,186.48 after 5 years

Initial payment $1,816.92

Payment after reset $2,186.48 +$369.56/mo

Balance at adjustment $295,874

Rate change 5.50% → 7.50%

Payment before vs after reset

Initial payment $1.8k
Increase at reset $370

Loan balance Balance

An ARM saves money during the fixed period but exposes you to higher payments when it adjusts. Here the payment changes by $369.56 a month — make sure you could afford the reset, or plan to sell or refinance first.

Balance & payment by year (rate resets at year 5)View table

Year	Monthly payment	Balance
1	$1,816.92	$315,689
2	$1,816.92	$311,135
3	$1,816.92	$306,325
4	$1,816.92	$301,243
5	$1,816.92	$295,874
6	$2,186.48	$291,685
7	$2,186.48	$287,170
8	$2,186.48	$282,305
9	$2,186.48	$277,062
10	$2,186.48	$271,413
11	$2,186.48	$265,324
12	$2,186.48	$258,763
13	$2,186.48	$251,693
14	$2,186.48	$244,074
15	$2,186.48	$235,863
16	$2,186.48	$227,015
17	$2,186.48	$217,480
18	$2,186.48	$207,205
19	$2,186.48	$196,132
20	$2,186.48	$184,200
21	$2,186.48	$171,341
22	$2,186.48	$157,484
23	$2,186.48	$142,551
24	$2,186.48	$126,459
25	$2,186.48	$109,117
26	$2,186.48	$90,429
27	$2,186.48	$70,291
28	$2,186.48	$48,589
29	$2,186.48	$25,202
30	$2,186.48	$0

The intro rate is the easy part

An ARM's low starting rate is fixed for a set number of years, then adjusts on a schedule tied to a market index plus a fixed margin. The real question is what happens at the first reset.

Rate caps limit how far the payment can climb, but the ceiling can still be well above where you started. Knowing that worst case up front is the whole point.

Fixed intro period: the "5" in a 5/1 ARM means five years before the first adjustment.
Rate caps: a 2/2/5 structure limits the first jump, yearly jumps, and lifetime rise.
Index plus margin: after the intro period your rate follows an index, plus the lender's set margin.
Exit plan: ARMs favor borrowers who expect to sell or refinance before the reset.

Compare the ARM's reset scenario against a steady payment in the fixed-payment calculator, and if rates fall you can always model an exit with the refinance tool. Keep an eye on where current Michigan rates sit relative to your intro offer.

Frequently asked questions

What does a 5/1 ARM mean?

The first number is how many years the intro rate is fixed — five, in a 5/1 ARM. The second is how often it adjusts afterward, here once a year. So you get five years of a low, steady rate, then annual resets tied to a market index plus a fixed margin your lender sets at closing.

How high can my ARM payment go after it resets?

That depends on the loan's caps, which limit the increase at the first adjustment, at each later adjustment, and over the life of the loan. A common structure is 2/2/5 — up to 2% at first reset, 2% per year after, and 5% total above the start rate. Always read those caps before signing.

Does an ARM make sense in Michigan right now?

An ARM can pay off if you're confident you'll sell or refinance before the fixed period ends — for example a job posting near Grand Rapids or Detroit that you expect to move on from. If you plan to stay put long term, the reset risk usually outweighs the lower intro rate.