ARM First Adjustment Calculator
Estimate the payment shock on an adjustable-rate mortgage when the fixed intro period ends and the rate resets for the first time.
How it works
Initial payment = PMT(loan, start rate, full term) · Balance at reset = amortized balance after fixed period · New payment = PMT(balance, new rate, remaining months)
An adjustable-rate mortgage (for example a 5/1 ARM) charges a fixed rate for an intro period, then re-prices to a new rate and recalculates the payment over the years that remain. The new payment is based on the balance still owed at the reset — not the original loan — spread across the shorter remaining term. When rates rise, this reset can raise the payment sharply, which is the "payment shock" borrowers are warned about.
Worked example
A $350,000 5/1 ARM at 5.5% over 30 years starts at $1,987/mo. After 5 years about $325,900 remains. If the rate resets to 8%, that balance amortizes over the remaining 25 years at $2,515/mo — a $528 monthly jump from a single adjustment.
Frequently asked questions
What does 5/1 ARM mean?
The first number is how many years the rate stays fixed (5), and the second is how often it can adjust afterward in years (1 = annually). A 7/6 ARM is fixed for 7 years then adjusts every 6 months.
Is the new payment based on my original loan amount?
No. It is based on the balance you still owe when the rate adjusts, repaid over the remaining term. Because you have paid down some principal, that balance is a bit lower than the original loan.
How high can my rate go?
ARMs have caps — a first-adjustment cap, a periodic cap, and a lifetime cap — that limit how far the rate can move at each reset and over the life of the loan. Check your note for your specific caps.
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Educational estimate, not financial advice.