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Adjustable Rate Mortgage
(ARM) Estimator

Considering an ARM for lower initial payments? The Adjustable Rate Mortgage (ARM) Estimator helps you calculate your future mortgage payments based on interest rate adjustments—so you can make an informed decision and plan for potential rate changes over time.



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What is Adjustable Rate Mortgage (ARM) Estimator

The Adjustable Rate Mortgage (ARM) Estimator is a mortgage planning tool designed to project how your monthly payments may change over time with a variable interest rate loan. Unlike fixed-rate mortgages, ARMs typically start with a lower interest rate for an initial fixed period (e.g., 5, 7, or 10 years), after which the rate adjusts periodically based on market conditions

This calculator is ideal for homebuyers who want to take advantage of lower initial rates, plan to move or refinance before the first adjustment, or are simply weighing the pros and cons of ARM vs. fixed-rate mortgages. It provides a clear view of how future interest rate caps, margins, and index rates might affect your monthly payment and total loan cost.




How it works

Adjustable Rate Mortgage (ARM) Estimator

To use the ARM Estimator, you’ll input the loan amount, initial interest rate, loan term, initial fixed period (e.g., 5 years), adjustment frequency (usually annually), and maximum rate caps (initial, periodic, and lifetime). You’ll also provide an estimated index rate and margin to project rate increases over time.

For example, if you’re taking a ₹60,00,000 loan with a 5/1 ARM at 6.5% interest, the calculator shows your monthly payment during the first five years and estimates future payments after rate adjustments based on your entered caps. It may show a scenario where your rate increases gradually over time, hitting a maximum cap. This allows you to evaluate potential risks and savings compared to a fixed-rate mortgage—helping you decide if an ARM aligns with your financial goals and timeline.



Frequently Asked Questions

What does 5/1 ARM mean Toggle
It means the rate is fixed for the first 5 years, then adjusts annually (once per year) based on market rates and your loan’s terms.
Are ARM rates always lower than fixed rates initially Toggle
Yes. ARMs generally offer lower initial interest rates, making them attractive for buyers who expect to sell or refinance within a few years.
What are rate caps in an ARM Toggle
Rate caps limit how much your interest rate can increase during the first adjustment, each year after that, and over the life of the loan.
Can my ARM payment go down Toggle
Yes. If market interest rates fall and your ARM is indexed accordingly, your monthly payments may decrease after an adjustment.
Is an ARM risky Toggle
It depends on how long you plan to keep the loan. ARMs can be cost-effective short-term but may become expensive if rates rise significantly over time.