A 10/1 ARM gives a long fixed period, so the rate is usually only a little below a 30-year fixed rate. It suits borrowers who expect to sell or refinance within 10 years.
How to use the 10/1 ARM Calculator
- Loan amount
- Initial rate (years 1–10)
- Expected index at the reset (e.g. SOFR)
- Margin
- First adjustment cap
- Lifetime cap (above the initial rate)
- 30-year fixed rate for comparison
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the loan amount, the initial rate, the expected index and margin after year 10, the first-adjustment and lifetime caps, and a 30-year fixed rate for comparison.
Tips
- Compare loans by APR and total cost, not just the monthly payment.
- Extra payments go straight to principal and can save a lot of interest.
- Pay off the highest-rate debt first if you want to save the most money.
- Check for prepayment penalties before paying a loan off early.
Common mistakes to avoid
- Stretching a loan term to lower the payment without seeing the extra interest.
- Paying only the minimum on credit cards.
- Forgetting fees that are rolled into the loan.
Inputs explained
| Field | What to enter |
|---|---|
| Loan amount | Amount in your currency |
| Initial rate (years 1–10) | In % |
| Expected index at the reset (e.g. SOFR) | In % |
| Margin | In % |
| First adjustment cap | In % |
| Lifetime cap (above the initial rate) | In % |
| 30-year fixed rate for comparison | In % |
What each result means
- Monthly payment, years 1–10 = pmt([Initial rate (years 1–10)]÷1200, 360, [Loan amount])
- Balance after 10 years = bal([Loan amount], [Initial rate (years 1–10)]÷1200, 360, 120)
- Rate after the first adjustment = min([Expected index at the reset (e.g. SOFR)] + [Margin], [Initial rate (years 1–10)] + [First adjustment cap], [Initial rate (years 1–10)] + [Lifetime cap (above the initial rate)])
- Payment after the first adjustment = pmt([Rate after the first adjustment]÷1200, 240, [Balance after 10 years])
- Worst-case payment (lifetime cap) = pmt(([Initial rate (years 1–10)] + [Lifetime cap (above the initial rate)])÷1200, 240, [Balance after 10 years])
- 30-year fixed payment = pmt([30-year fixed rate for comparison]÷1200, 360, [Loan amount])
- Savings in the first 10 years vs fixed = ([30-year fixed payment] – [Monthly payment, years 1–10])×120
Example values
How the main result changes when Loan amount changes and everything else stays at the example values above:
| Loan amount | Monthly payment, years 1–10 |
|---|---|
| 200,000 | 1,199.1 |
| 300,000 | 1,798.65 |
| 400,000 | 2,398.2 |
| 500,000 | 2,997.75 |
| 600,000 | 3,597.3 |
| 800,000 | 4,796.4 |
Formula
Payment during years 1–10 = pmt(start rate ÷ 12, 360, loan)Balance after 10 years = bal(loan, i, 360, 120)Payment after reset = pmt(new rate ÷ 12, 240, balance)New rate = index + margin, limited by the caps (commonly 5/1/5 or 2/2/5)Worked example
Inputs — Loan amount: $400,000; Initial rate (years 1–10): 6 %; Expected index at the reset (e.g. SOFR): 4 %; Margin: 2.75 %; First adjustment cap: 5 %; Lifetime cap (above the initial rate): 5 %; 30-year fixed rate for comparison: 6.4 %.
Results — Monthly payment, years 1–10 = $2,398.20; Balance after 10 years = $334,742.90; Rate after the first adjustment = 6.75 %; Payment after the first adjustment = $2,545.26; Worst-case payment (lifetime cap) = $3,455.18; 30-year fixed payment = $2,502.02; Savings in the first 10 years vs fixed = $12,458.58.
Frequently asked questions
What is a 10/1 ARM?
A mortgage with a fixed rate for 10 years that then adjusts once a year.
What do 5/1/5 caps mean?
Up to 5 points at the first adjustment, 1 point per later adjustment and 5 points over the life of the loan.
Is a 10/1 ARM risky?
Less than shorter ARMs, but payments can rise sharply after year 10.
What formula does the 10/1 ARM Calculator use?
Payment during years 1–10 = pmt(start rate ÷ 12, 360, loan).