What is a 5/1 ARM mortgage?

A 5/1 ARM (Adjustable-Rate Mortgage) is a home loan with an interest rate that remains fixed for the first 5 years. After that, the rate adjusts annually based on a benchmark index, such as SOFR, plus a fixed margin.

How do rate caps work on a 5/1 ARM?

A 5/1 ARM typically has a 2% annual adjustment cap and a 5% lifetime cap, though these can vary by lender. This means your interest rate can increase by up to the annual cap each year after the initial 5-year period, and no more than the lifetime cap total over the life of the loan.

What index is used for a 5/1 ARM?

Most 5/1 ARMs use the SOFR (Secured Overnight Financing Rate) as the benchmark index. Fannie Mae also accepts the 1-Year Treasury Constant Maturity Rate. Your mortgage rate is calculated as Index + Margin.

Is a 5/1 ARM a good choice for me?

A 5/1 ARM can be a good choice if you plan to stay in your home for 5 years or less, expect your income to rise, or want lower initial monthly payments. However, it carries the risk of higher payments after the fixed period ends.

_{5/1 ARM Calculator 2026}

_{Estimate your adjustable-rate mortgage
payments – initial fixed period + annual adjustments}

New to ARMs? Read how 5/1 ARMs work — fixed period, rate caps, worst-case payments, and who benefits most.

_{Our free 5/1 ARM calculator helps you
forecast adjustable-rate mortgage payments after five years
of fixed rates. Use this calculator to see how extra payments
or interest-only options impact your loan balance and long-term
interest costs. Adjust each field to match your specific loan
terms, and the totals will automatically update. If you're considering
a shorter initial fixed period, compare results with our

3/1 ARM calculator or see how a

7/1 ARM mortgage compares.}

Basic Loan Information

Loan Amount ($)

Initial Interest Rate (%)

Loan Term (Years)

ARM Adjustment Details

Note: The boxes below are for illustration purposes. You may adjust the values to match your specific loan terms.

Adjustment Frequency after initial fixed period

Note: The calculation boxes below are for illustration purposes. You can edit any field to explore different scenarios, and the totals will automatically update.

Margin + Index = Interest Rate

Margin (%)

Index (%)

Interest Rate (%)

Current Interest Rate + Annual Cap = Interest Rate

Current Interest Rate (%)

Annual Cap (%)

Interest Rate (%)

Lifetime Interest Rate Cap (%)

Annual Rate Cap (%)

Tip: Enter your lender's actual Annual Rate Cap and Lifetime Cap. The yellow formula box above will mirror your Annual Cap, and the payment results and captions below will update to match.

Optional Settings

Interest-only payments during initial fixed period

Extra Principal Payment ($/month)

Payment Summary

Initial Monthly Payment

Your fixed payment for the first 5 years

First Adjustment Payment

Year 6 payment (rate + annual cap)

Maximum Payment

At lifetime cap (initial rate + lifetime cap)

Total Interest (Worst-Case)

Based on annual cap increases to the lifetime cap

Amortization Schedule (Worst-Case Scenario)

Shows rates increasing by your annual cap after year 5, up to the lifetime cap

Year	Rate	Monthly Payment	Principal	Interest	Balance

How to Find the Current Index Rate for Your 5/1 ARM

Understanding how your adjustable-rate mortgage is calculated doesn't have to be confusing. The boxes above show exactly how your new interest rate is determined: Index + Margin = Interest Rate. Here are the best sources for the index rate used by Fannie Mae and Freddie Mac:

Official Index Rate Sources

1. Federal Reserve Bank of New York (Official SOFR Source)
Secured Overnight Financing Rate (SOFR): https://www.newyorkfed.org/markets/reference-rates/sofr-averages-and-index
Look for the 30-DAY AVERAGE (%). This is the index rate that Fannie Mae uses for most adjustable-rate mortgages. As of this writing, the index rate is approximately 4.20%.

2. Federal Reserve Bank of St. Louis (FRED)
1-Year Treasury Constant Maturity Rate: https://fred.stlouisfed.org/series/DGS1
In the top-left corner, under "Observations," you'll see the current index rate. As of this writing, the rate is 3.59%.

Pro Tip: Enter the index rate in the box above. Your lender will provide the margin - the additional percentage they charge - which remains fixed for the life of the loan. Index + Margin = Your Interest Rate.

Understanding Rate Caps on a 5/1 ARM

What happens if the index rate spikes? That's where rate caps protect you. Most 5/1 ARMs have a 2% annual adjustment cap and a 5% lifetime cap, though these can vary by lender. Enter your loan's actual caps in the calculator above — the payment results and captions will update to match. Then review the worst-case amortization schedule to see how payments could adjust over time.

Important: When Does the Rate Adjust?

Ask the lender when the new interest rate is calculated. For example: The lender calculates the new rate at the end of the initial term (after 5 years for a 5/1 ARM), and the new rate will apply for the next adjustment period.

Is a 5/1 ARM Right for You?

This 5/1 ARM calculator is designed to help you clearly understand how an adjustable-rate mortgage works - and to give you the confidence to manage it wisely. Before committing to any ARM, review the pros and cons of a conventional loan to see if a fixed-rate mortgage might better suit your long-term plans.

You can also use our conventional loan monthly payment calculator to compare payment scenarios across different loan types. For different ARM terms, explore our 3/1 ARM calculator and 7/1 ARM calculator.

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