10/1 ARM Mortgage Calculator

Finance

A 10/1 ARM is an adjustable-rate mortgage with a fixed interest rate for the first 10 years that then adjusts once a year. This calculator estimates your monthly principal-and-interest payment during the fixed period and what it could become after the first adjustment, so you can see how much your payment might rise. Enter the loan amount, the initial and expected adjusted rates, and the term.

Formula

Monthly payment = P × [r(1+r)^n] ÷ [(1+r)^n − 1], where r is the monthly rate and n is the number of monthly payments. The initial payment uses the start rate; the adjusted payment uses the new rate.
  • A 10/1 ARM keeps the same rate for the first 10 years (120 payments), then resets once every year afterwards.
  • Both payments here are amortised over the full term, so the only thing that changes between them is the interest rate.
  • The monthly rate is the annual rate divided by 12, and the term is multiplied by 12 to get the number of payments.
  • The real adjusted rate is set by an index plus a margin at reset time and is capped, so treat the adjusted figure as a planning estimate.
  • Property tax, insurance and HOA dues are not included; this is principal and interest only.

Example Calculation

Inputs
  • Loan Principal ($): 500000
  • Initial Rate %: 4
  • Adjusted Rate %: 5
  • Loan Term (years): 30

On a $500,000 loan over 30 years, a 4% fixed rate gives a monthly payment of about $2,387 during the first 10 years. If the rate later adjusts to 5%, the payment rises to roughly $2,684 — about $297 more each month.

Frequently asked questions

What does 10/1 mean in a 10/1 ARM?
The 10 means the interest rate is fixed for the first 10 years. The 1 means that after that, the rate can adjust once every year for the rest of the loan.
Why does the adjusted payment differ from the initial one?
Both payments are spread over the full term, so the difference comes purely from the interest rate. A higher rate after the adjustment means a higher monthly payment.
How is the adjusted rate decided?
At reset the lender sets it as a published index plus a fixed margin, subject to caps that limit how much it can move in one step and over the life of the loan.
Is a 10/1 ARM cheaper than a fixed-rate mortgage?
Usually the starting rate is lower than a comparable 30-year fixed, which saves money early on. The risk is that payments rise once the fixed period ends.
Does this include taxes and insurance?
No. It shows principal and interest only. Add property tax, homeowner's insurance and any HOA fees separately to estimate your full housing cost.