How to use this calculator
- Enter your current loan balance and current interest rate.
- Enter the margin from your loan note and the current value of your loan’s index (many newer ARMs use SOFR).
- Enter the periodic cap and lifetime cap, and the years left on the loan. Blank caps and term use 2%, 5%, and 27 years.
What the results show
- Your current principal-and-interest payment.
- The fully indexed rate (index plus margin) and the payment at the first adjustment, limited by the periodic and lifetime caps.
- A second adjustment that rises by another periodic cap, and a worst case at the lifetime cap. These are stress tests, not rate forecasts.
Frequently asked questions
What is the fully indexed rate?
It is the index value plus the margin in your loan note. At an adjustment, the new rate generally moves toward the fully indexed rate, but caps can limit how far it moves at once. Check your note for rounding rules and any rate floor.
What do the periodic and lifetime caps do?
The periodic cap limits how much the rate can change at a single adjustment. The lifetime cap limits how high the rate can go over the life of the loan. Some loans also have a different, larger cap for the first adjustment; if yours does, enter that number as the periodic cap to model the first reset.
Is the worst case my real maximum payment?
It is the payment at your entered rate plus the lifetime cap, using the same balance and remaining term. Lifetime caps are usually set relative to the loan’s starting rate, so if you enter a rate that has already adjusted, your actual ceiling may be lower. Confirm the maximum rate stated in your loan documents.
Where do I find my margin and index?
The margin, index, caps, and adjustment schedule are in your promissory note, and the Loan Estimate and Closing Disclosure summarize them for new loans. Servicers generally must send a notice before an ARM payment changes that shows the new rate and payment.
Lighthouse provides educational information, not a personal loan quote, lending decision, or legal or financial advice. Results are estimates based only on the numbers you enter. Verify the figures against your documents and ask your lender, servicer, or a qualified professional about your circumstances.