An adjustable rate mortgage loan calculator turns five numbers into a payment schedule: the starting rate, the index, the margin, the adjustment period and the caps. On October 9, 2026, those numbers put the reset rate on a typical 5/1 ARM just 0.12 percentage point above its starting rate.

This matters to anyone weighing a 5/1 ARM against a 30-year fixed loan. A calculator's output is only as reliable as its inputs, and the figure that decides whether an ARM is affordable is the worst-case payment. The Consumer Financial Protection Bureau tells borrowers to calculate the maximum payment before taking one. Every number below can be checked by hand against any lender's screen.

Five inputs, one formula

The formula comes from the CFPB: Index + Margin = Interest Rate, subject to any rate caps. The lender chooses the index at application, and that choice generally does not change after closing.

Index. Freddie Mac moved conforming ARMs from LIBOR to the Secured Overnight Financing Rate after LIBOR stopped publishing on June 30, 2023. Lenders use the 30-day average SOFR at each reset, not the single-day print. That average stood at 3.81569% on October 9, according to FRED, which mirrors New York Fed data.

Margin. The margin is the number of points added to the index. It is fixed in the loan agreement for the life of the loan, the CFPB says. NerdWallet's example uses 2.75 points. HSH.com reports that margins on loans sold to Fannie Mae or Freddie Mac can run up to 3 points.

Adjustment period. A 5/1 ARM holds its rate for five years and then resets once a year. NerdWallet calls the 5/6 variant, which resets every six months after year five, the most popular current structure.

Caps. The CFPB defines three caps:

  • The initial cap, commonly 2 or 5 points, limits the first reset.
  • The periodic cap limits each later reset.
  • The lifetime cap limits the total rise above the initial rate.

A "2/2/5" label lists them in that order. HSH reports that 3- and 5-year ARMs typically carry 2/1/5 caps and 7- and 10-year ARMs carry 5/1/5.

A calculator runs the inputs in this order:

  1. Amortize the loan at the starting rate over the full term.
  2. Find the balance on the reset date.
  3. Add the index to the margin and limit the result by the caps.
  4. Spread the remaining balance over the remaining months at the new rate.

Today's numbers, run through the math

A hypothetical $400,000 5/1 ARM with 2/2/5 caps

Say a borrower takes a $400,000, 30-year 5/1 ARM at 6.449%. That was The Mortgage Reports' national average on October 9, 2026. The index is the 30-day average SOFR of 3.81569% (FRED, October 9). The margin is 2.75 points, and the caps are 2/2/5. The fully indexed rate below is the unrounded sum. Payments are rounded to the dollar.

Payment, months 1 to 60, at 6.449%$2,515
Balance remaining at month 60$374,223
Fully indexed rate if SOFR is unchanged: 3.81569% + 2.75%6.566%
Payment from month 61 at 6.566%, over 300 months$2,542
Highest rate allowed at first reset: 6.449% + 28.449%
Worst-case payment, year 6$3,000
Worst case, year 7, at 10.449%$3,508
Lifetime ceiling of 11.449%, year 8 onward$3,766

If the index holds where it is, the reset adds about $27 a month. The worst case requires the 30-day average SOFR to reach about 5.70% by the first reset, roughly 1.9 points above the October 9 reading. For comparison, a 30-year fixed loan at 7.536%, The Mortgage Reports' October 9 average, costs about $2,807 a month on the same $400,000. Under the 2/1/5 caps HSH describes for 5-year ARMs, the climb to 11.449% would take four resets instead of three.

Not the number on the rate table

Several published figures look like the ARM rate and are not. A calculator that is given the wrong one produces a payment no lender will charge.

Figure What it measures Reading cited
Start rate Fixed rate for the first five years 6.449%, The Mortgage Reports, Oct. 9
APR Rate plus estimated fees and points 6.904%, The Mortgage Reports; 7.17%, NerdWallet, Oct. 9
Overnight SOFR Single-day repo rate; not used for resets 3.87% to 3.90%, Oct. 1 to 8, SOFRrate.com
30-day average SOFR The index most SOFR ARMs reset on 3.81569%, FRED, Oct. 9
Fully indexed rate Index plus margin on the reset date 6.566% with a 2.75 margin

The gap between a 6.449% rate and a 7.17% APR is mostly a gap in what is being measured. It does not show one lender charging more than another. A calculator needs the note rate.

What the calculator cannot know

The $2,542 figure assumes the index stays frozen for five years, and nothing in the data supports that. HSH.com put the 30-day average at 3.76116% on October 2. FRED had it at 3.81569% a week later, after rising about 3 basis points a day from October 5 to 9.

The current spread between start rate and fully indexed rate tells a borrower what a reset would cost today. It says nothing about rates in 2031. NerdWallet and The Mortgage Reports both describe ARMs as best suited to borrowers who plan to sell or refinance before the fixed period ends. For anyone who might not, the worst-case rows carry more weight than the expected-case row.

Before locking

A borrower should take the quoted start rate, margin, index and cap structure from the lender's paperwork and run them through a calculator. The output should then be checked against the steps above.

The figure to keep is the worst-case payment at the first reset and at the lifetime cap. "If you can't afford the higher payments on today's income, you may want to consider another loan," the CFPB says. That worst case belongs beside fixed-rate quotes from more than one lender. Comparing several quotes also shows where the break-even against a fixed loan falls for a given holding period.