10 Year ARM Mortgage Calculator

What a 10/1 ARM is, in plain terms

A 10/1 ARM is a 30-year mortgage that behaves like two loans glued together. For the first 120 payments the interest rate cannot move, so the payment is as steady as a fixed loan's. From month 121 the rate is reset once every 12 months for the remaining 20 years, and each reset also re-spreads the remaining balance over the remaining months, which is why the payment rarely jumps as far as the rate does.

The Consumer Financial Protection Bureau describes the naming in its guide to ARM fine print: the first number is the fixed period in years, the second is how often the rate adjusts after that. A 10/1 holds for a decade, then adjusts annually. A 5/1 holds for five years, a 7/1 for seven.

The calculator on this page runs the whole 30-year schedule. It prices the fixed decade, then applies each reset in turn, respecting the caps in your contract, and reports the payment at every stage plus the total interest for the index path you pick.

Start rate, index, margin, and the fully indexed rate

Three numbers drive the second half of the loan, and all three appear on your Loan Estimate.

• Start rate. The teaser rate for years 1 to 10. On the example used here it is 5.90%, which sits well under the 7.24% that Freddie Mac's Primary Mortgage Market Survey averaged for the 30-year fixed in late October 2026.
• Index. A published market rate that the loan follows, such as the prime rate, a Treasury constant maturity yield or a SOFR-based measure. The example assumes the index prints 4.20% at the first reset.
• Margin. A fixed markup written into the contract, 2.50% here. It never changes for the life of the loan.

Index plus margin is the fully indexed rate: 4.20 plus 2.50 equals 6.70%. That is where the loan wants to sit after the fixed period. The CFPB explains the index and margin split in the same terms, and notes that the start rate is often set below the fully indexed level to make the loan look cheaper at closing.

Here the gap is 0.80 of a point: 5.90% now, 6.70% later. That discount is the entire reason to consider the loan. The question is not whether the payment rises, because it usually does. The question is how much, how soon, and whether the savings from the first decade cover the increase.

The recast at month 121, in dollars

On a $350,000 loan at 5.90%, the payment for the first 120 months is $2,075.98. Of the $249,117.60 paid in that decade, $191,231.27 is interest and $57,886.06 is principal, leaving a balance of $292,113.94. Roughly 77 cents of every dollar went to the lender, which is normal this early in a 30-year schedule.

At month 121 the rate moves to 6.70% and the remaining $292,113.94 is amortized over 240 months. The new payment is $2,212.45, a rise of $136.47, or 6.6%. A rate that climbed 0.80 of a point produced a payment that climbed less than a tenth as much in percentage terms, because the balance is 16.5% smaller and the term is 10 years shorter.

The second reset is worth a look. The rate did not change at all, and neither did the payment, even though the balance fell to $284,917.81. A recast at an unchanged rate leaves the payment exactly where it was, because the smaller balance and the shorter term cancel out. The payment only moves when the rate moves, which makes the reset schedule easier to plan around than the word adjustable suggests.

What four index paths cost over 30 years

Nobody knows where the index goes, so the honest way to read an ARM is to price several paths. The table below runs four of them through the full schedule, with the 2/1/5 caps applied at every reset and payments recast each year.

The spread between the best and worst path is $249,374.13 of interest, which is 71% of the original loan. That range is the price of the 0.80 point discount in the first decade, and it is why the loan rewards a borrower with a plan to sell, refinance or pay down before the resets pile up.

Two details in the table surprise people. On the steady path the payment never moves again after month 121, so years 11 through 30 all cost $2,212.45. On the 1-point path the peak arrives in year 16, four years earlier than on the half-point path, because a full point a year reaches the 10.90% lifetime ceiling sooner and then stops climbing.

How the 2/1/5 caps work

Three caps limit the damage, and the CFPB's rate cap explainer defines each one: the initial adjustment cap limits the first move, the periodic cap limits every move after that, and the lifetime cap limits the total climb from the start rate.

The example loan carries a 2 point initial cap, a 1 point periodic cap and a 5 point lifetime cap, written as 2/1/5. That produces a fixed ladder:

• First reset: the rate can go no higher than 7.90%, and the fully indexed 6.70% lands under it, so 6.70% applies.
• Each later reset: no more than 1 point a year, so the worst case walks 6.70%, 7.70%, 8.70%, 9.70%, 10.70% and finally 10.90%.
• Lifetime: the rate can never exceed 10.90%, which is 5 points above the 5.90% start.

A 10.90% rate on the $292,113.94 balance that remains at month 121 would cost $2,995.31 a month, 44.3% more than the payment in the fixed decade and $610.07 more than the 30-year fixed loan at 7.24%. That is the number to budget against, not the teaser payment. Lenders are required to disclose it, and the CFPB advises borrowers to qualify at the highest payment the loan can reach rather than the start rate.

Caps also work downward. The periodic cap limits how fast the rate can fall, and most contracts carry a floor at the margin, so a collapsing index does not push the rate below the lender's minimum. This calculator floors the rate at the 2.50% margin: on the falling path the payment slides to $1,848.72 by year 16 and bottoms out at $1,671.09 once the floor binds in year 20, rather than tracking the index all the way down.

The worst case, year by year

The caps turn the second decade into a staircase, and the worst case is worth walking one step at a time. On the example loan the fully indexed rate of 6.70% arrives at month 121, then each later reset can add at most one point until the 10.90% lifetime ceiling stops the climb. Every step also re-spreads the remaining balance over the months that are left, which softens each jump.

Notice what the staircase hides. The rate climbs four points between 6.70% and 10.70%, yet the payment grows by $672.81 over the same span, because the balance keeps shrinking and the term keeps shortening. The final reset adds one fifth of a point, the lifetime cap holding the loan back, and the payment still lands below the $2,995.31 stress test quoted earlier, since that test priced the full decade-old balance at the ceiling rate. A borrower who can absorb the month 121 jump and still has room for another $705 by month 181 has, by construction, survived the worst path this contract allows.

Who the loan fits, and the questions to ask

The 30-year fixed at 7.24% costs $2,385.24 on the same $350,000, which is $309.26 more each month than the ARM. Over the 120 fixed payments that difference adds up to $37,111.62, and it is money the borrower keeps even if the loan resets upward later. Total interest on the fixed loan comes to $508,687.65, so the ARM wins on the steady and falling paths and loses on the two rising ones.

The loan fits when the holding period ends inside the decade: a buyer who expects to sell in year 7 or refinance in year 9 collects most of the $37,111.62 and never meets a reset. It fits less well for someone who plans to stay for 30 years and would struggle with a payment 40% higher than the one they signed up for.

Five questions worth asking before signing:

• Which index does the note name, and where is it published?
• What is the margin, and is it fixed for the life of the loan?
• What are the initial, periodic and lifetime caps in points?
• Is there a floor, and where does it sit?
• What is the payment at the lifetime cap, and does my budget survive it?

The answers are all on the Loan Estimate and the note, and they turn a vague promise about low rates into a schedule you can price. Run those four numbers through the calculator above before you compare offers, because two ARMs with the same start rate can carry markedly different caps and margins, and the caps are what decide the second decade.