ARM Payment Shock Calculator
When your Adjustable Rate Mortgage (ARM) resets, payments can jump 30-60% in a single year. Calculate the worst-case scenario using your initial cap, periodic cap, and lifetime cap to plan for the reset.
| Current monthly P&I | — |
| Fully-indexed rate (index + margin) | — |
| Max rate at first reset (current + initial cap) | — |
| Max payment at first reset | — |
| Lifetime max rate | — |
| Lifetime max monthly payment | — |
| Worst-case payment shock vs today | — |
When your Adjustable Rate Mortgage (ARM) leaves its fixed-rate period (typically 5, 7, or 10 years), the rate resets to your loan's index plus margin — subject to three caps. Many homeowners face 30-60% payment increases at reset. Plan for the worst-case scenario using the lifetime cap, not just the next reset.
The Three Caps
Initial cap: max increase at the FIRST adjustment (typically 2% or 5%). Periodic cap: max increase at SUBSEQUENT adjustments (typically 2%, applied annually). Lifetime cap: max rate above your initial rate (typically 5% — sometimes 6%). The lifetime cap is the worst-case scenario you need to budget for.
Fully-Indexed Rate
Index + margin = your 'fully-indexed' rate. If 1-Year CMT is 4.5% and your margin is 2.75%, your fully-indexed rate is 7.25%. At reset, your rate moves to fully-indexed UNLESS the cap restricts it. With current 2026 SOFR around 4.4-4.5%, most ARMs from 2020-2022 (3% rates) will reset to their caps.
Should You Refinance Before Reset?
If today's 30-year fixed rate is lower than your worst-case reset rate, refinance. If you can't afford the lifetime max payment, refinance regardless of rate (you'll save on stress). Refi window opens 90-180 days before reset — start the application 4-6 months out for safety.
Last updated May 2026. Sources: CFPB ARM Guide, Federal Reserve ARM Disclosures.