The 30-day average SOFR, the index behind many adjustable-rate mortgages, stood at 3.89253% on October 26, 2026, up from 3.64783% in early April, according to FRED. That figure sets what a 5/1 ARM payment becomes once its first five years are up.

A borrower weighing an ARM this autumn usually knows the opening payment and very little about the one that follows. A calculator that asks only for a loan amount and a starting rate can show the first five years and nothing after them.

This page lists the six inputs a full ARM calculation needs, then runs them on a hypothetical $400,000 loan to produce a best-case, likely-case and worst-case payment at the first reset.

Index plus margin, then the caps

Once the fixed period ends, an ARM's rate is the index plus the margin, subject to the loan's caps. The Consumer Financial Protection Bureau puts it as a single line: "Index + Margin = Your Interest Rate (subject to any rate caps)."

The index is a market benchmark that moves over time, such as SOFR (the Secured Overnight Financing Rate) or the 1-year CMT. The lender picks it at application, and the CFPB says the choice generally does not change after closing. The margin is a fixed number of percentage points added to the index. It is written into the loan agreement and never changes, though it varies by lender and program.

Index plus margin is the fully indexed rate. Caps limit how far the rate may move toward it. In notation such as 2/2/5, firstTuesday Journal explains, the numbers are, in order, the most the rate can change at the first adjustment, the most at each adjustment after that, and the most it can ever rise above the starting rate.

Here is one concrete case. Take a margin of 2.75% and the October 26 index of 3.89253%: the fully indexed rate is about 6.64%. If the loan started at 6.33% with a 2% initial cap, the first reset can go as high as 8.33%. The index sits well below that, so the rate resets to 6.64%. On a 5/1 loan the rate holds for five years and then adjusts once a year, and the same test runs at every adjustment.

What the calculator needs

Six inputs make the reset math work. The calculation costs nothing and takes about 15 minutes once the numbers are in hand. Most of the delay comes from finding the right index series.

  • Loan amount

    The amount borrowed, not the home price. The example below uses $400,000, the same as 20% down on a $500,000 home.

  • Start rate

    The rate fixed for the opening period. Lenders quote it. A national average works only as a placeholder.

  • Fixed period and adjustment interval

    On a 5/1 ARM that means five fixed years, then one adjustment a year.

  • Index and its current value

    The note names the index. For loans tied to the 30-day average SOFR, the current value is FRED series SOFR30DAYAVG.

  • Margin

    A fixed add-on from the loan agreement. No national average margin is published, so it has to come from a lender.

  • Caps, in order

    Initial, periodic and lifetime, such as 2/2/5. Also check for a payment cap, a floor rate or a carryover provision.

Running the numbers on a $400,000 5/1 ARM

The example below is hypothetical. The start rate is the 6.33% interest rate in one table on Bankrate's 5/1 ARM page as of October 26, 2026. Bankrate's headline figure is a 6.90% APR, and a second table on the same page shows 6.35%, so the start rate is a market estimate and not an official statistic. The 2.75% margin and 2/2/5 caps are illustrative, taken from a sum.money worked example. The figures below are principal and interest only, rounded, on a 30-year term.

  1. Compute the fixed-period payment

    Amortize $400,000 at 6.33% over 360 months. The calculator should return about $2,484 a month for years one to five.

  2. Find the balance at the first reset

    After 60 payments, roughly $373,700 is still owed. The reset payment is calculated on this balance over the 300 months left, not on the original $400,000.

  3. Add the index to the margin

    3.89253% (30-day average SOFR, October 26, 2026) plus 2.75% gives a fully indexed rate of about 6.64%.

  4. Test it against the caps

    With a 2% initial cap, the first reset can land anywhere from 4.33% to 8.33%. The lifetime cap puts the ceiling at 11.33%. A 6.64% fully indexed rate falls inside both limits, so it applies in full.

  5. Run three index scenarios

    Re-amortize the $373,700 balance over 300 months at a best-case, likely-case and worst-case rate. Each result should change by tens or hundreds of dollars. If all three come back the same, the calculator is not applying the inputs.

Payment at the first adjustment, year six

Hypothetical: $400,000 5/1 ARM, 6.33% start rate, 2.75% margin, 2/2/5 caps, balance of about $373,700 at the reset. The best case assumes the index falls one point to about 2.89%. The likely case holds the index at its October 26 level. The worst case assumes the index rises far enough for the 2% initial cap to bind.

Years 1 to 5 at 6.33%$2,484 a month
Best case: index down 1 point, rate 5.64%$2,327 a month
Likely case: index unchanged, rate 6.64%$2,557 a month
Worst case: initial cap binds, rate 8.33%$2,966 a month
Lifetime ceiling (reachable only at later resets)11.33%
For comparison: 30-year fixed at 7.32%$2,748 a month

In the likely case, the year-six payment rises about $73 a month. If the initial cap binds, it rises about $482. The fixed comparison uses Freddie Mac's 7.32% average for the week of October 22, 2026. Against that, the ARM's opening payment is about $264 a month lower for five years. Under 2/2/5 caps, the 11.33% ceiling could not be reached until the third adjustment, in year eight at the earliest.

The order matters. Compute the fully indexed rate first, then hold it against the initial or periodic cap, then against the lifetime ceiling. Re-amortize only after that.

Where first attempts go wrong

Searching for a Freddie Mac ARM figure. A borrower who searches for "Freddie Mac 5/1 ARM rate" will find nothing current, or an old figure from before November 2022. The sign is a date that is years out of date. The fix is a private average, labeled as such, and then a lender quote. MortgageDaily cautioned that Bankrate's 5/1 ARM APR, 6.78% on October 8, "isn't directly comparable" with fixed-rate surveys built on different data. The blog has explained how to read an ARM quote against those averages.

Using the wrong SOFR series. Overnight SOFR, the 30-day average and the 90-day average are different numbers. Overnight SOFR was 3.90% on October 6, according to SOFRrate.com, while the 30-day average was about 3.75% on October 1. The sign is an index figure that does not match the series named in the note. The fix is to read the note and pull that series, which for the 30-day average is FRED's SOFR30DAYAVG.

Applying the lifetime cap at the first reset. The sum.money example uses a 2/2/5 loan starting at 5.5%. Its worst case jumps to the 10.5% lifetime ceiling at the first adjustment and shows a payment of about $3,370. Under the caps it states, the first reset could reach only 7.5%. The sign is a worst-case rate more than one initial cap above the start rate. The fix is to apply the caps one adjustment at a time.

Ignoring carryover and payment caps. firstTuesday Journal describes loans where a rise blocked by a periodic cap is carried forward. In its example, the rate stayed at 8.5% after the index fell a point, because the carried-over point offset the drop. A payment cap is a different risk: if the capped payment does not cover the interest, the shortfall is added to principal (negative amortization), and such loans are generally not Qualified Mortgages. The sign is either clause in the loan documents. A standard calculator models neither one.

After the first result: a real margin and real caps

The worked example rests on two numbers no national survey publishes, the margin and the cap structure. Bankrate's page describes margins and caps only in general terms. The CFPB says the margin varies by lender and loan program. A borrower's own reset payment depends on the figures in a written quote and, later, the loan agreement.

So the next step is to get quotes from more than one lender and run each through the same five steps. The index is shared across loans that use the same series. The margin and caps are not, and a quote with a lower start rate can carry a higher margin that costs more from year six on.

The counter-case deserves its own weight. The likely case above assumes the index stays where it was on October 26, five years before the reset. The 30-day average SOFR rose about 21 basis points between late January and late October 2026, and Bankrate's 5/1 ARM APR rose from 6.08% on April 9 to 6.90% on October 26. A five-year forecast of either is not something a calculator can supply, which is why the worst case belongs in the comparison alongside the likely one.

How is the fully indexed rate rounded and re-amortized at each reset?

That page works through the ARM math adjustment by adjustment, beyond the first reset.

Read how to calculate an ARM

Questions people ask at this stage

Whichever index the loan's note names. Bankrate describes SOFR as the typical benchmark, and SOFRrate.com notes many post-LIBOR loans use the 30-day average SOFR or the 1-year CMT. The CFPB says the lender picks the index at application, and it generally does not change after closing.

The first reset can move the rate at most 2 points. Each later reset can move it at most 2 points. Over the life of the loan, the rate can never rise more than 5 points above the start rate. On a loan starting at 6.33%, that means a first-reset maximum of 8.33% and a lifetime ceiling of 11.33%.

No. Freddie Mac stopped publishing adjustable rates in November 2022, and FRED's 5/1 ARM series is marked discontinued. Current averages come from private sources such as Bankrate, which showed a 6.90% 5/1 ARM APR on October 26, 2026.

At the reset, the payment is recalculated on the remaining balance over the remaining term. In the example above, a move from 6.33% to 6.64% raises the payment from about $2,484 to about $2,557. The new payment is based on a $373,700 balance over 25 years.

Yes, if index plus margin comes in below the start rate, within the caps and above any floor rate in the loan. In the hypothetical best case above, a one-point drop in the index cuts the payment to about $2,327. A carryover provision can offset part or all of such a decline.