Financial glossary
Adjustable-Rate Mortgage (ARM)
In plain English
A mortgage whose interest rate can change after an initial fixed period according to an index, margin, adjustment schedule, and caps.
An adjustable-rate mortgage (ARM) starts with a fixed or introductory rate and can reset later using the contract’s index, margin, adjustment schedule, and caps. The lower starting payment is not a guarantee of lower lifetime cost. Stress-test the reset in the ARM mortgage calculator.
Related calculators
- Adjustable-Rate Mortgage CalculatorCompare an adjustable-rate mortgage initial payment with a reset-rate stress case after the fixed period. See the payment change clearly.
- Mortgage CalculatorEstimate a complete monthly mortgage payment with principal, interest, property tax, insurance, PMI, and HOA dues. See total interest and loan cost.
- Refinance CalculatorSee if refinancing pays off: new payment, monthly savings, break-even point on closing costs, and lifetime interest compared with your current loan.