ARM vs Fixed: Capped Payment Stress
Compare ARM intro P&I and the full capped-reset path with a fixed loan. Enter six- or twelve-month resets; separate the note ceiling from the attained rate.
What This Calculator Does
Use matching principal and amortization terms to compare the fixed quote with an ARM's intro payment and a hypothetical upward-cap path. The model uses your reset frequency, recasts the remaining debt over the remaining months, and follows every scheduled event to payoff. It is not an index forecast or a full-cost recommendation.
Who Is This For
Borrowers comparing compatible U.S. ARM and fixed-rate note terms in dollars, including six-month and annual reset structures.
How It Works
Supply all nine facts with no assumed rate or cap defaults. Select the intro period, common loan term and six- or twelve-month cadence; confirm the fully amortizing P&I scope. Read the complete 13-metric summary and full reset table, especially first reset, attained rate and first peak month.
Frequently Asked Questions
What does this comparison calculate?
The monthly principal and interest during the ARM's intro period, the fixed-rate payment, and a worst-case path with every rate cap reached through the final payment. Both loans have the same amount and term. It also shows the payment difference during the intro period (+ or −). Fees, insurance, escrow, APR, equity from early payoff and which loan costs less overall are not covered.
How do intro years differ from reset frequency?
Intro years say how long the starting rate is fixed. The later cadence is every 6 or 12 months. With 5 intro years, the modeled first reset is payment month 61; later resets start at 67 for six-month cadence or 73 for annual cadence. Illustrative 400k/30-year, 5.5% intro and 2/1/5 caps reach 10.5% at month 79 versus 97, with peaks about $3,473.60 versus $3,454.15. These are hypothetical inputs, not quotes.
Are the caps percentages or percentage points?
They are the most the rate can rise, in percentage points, not discount points or percentage growth. A 5.5% intro rate plus a 5-point lifetime cap gives a contract ceiling of 10.5%. The summary shows that ceiling separately from the increase and from the highest rate actually reached before payoff. The input limits and a ceiling of up to 50% are form limits, not law.
Why is the payment recalculated from the remaining balance?
After earlier monthly payments, less principal is owed and fewer months remain. Each changed-rate reset fully amortizes that modeled balance over those remaining months. It does not start again with the original loan amount or a new 30-year term. If the rate is unchanged, the payment is mathematically unchanged.
What if the intro covers the term or a cap is zero?
An intro covering the term produces no reset before payoff: the first-reset fields are not applicable, and the intro payment is the peak from month 1. A zero upward cap is a confirmed limit, not a missing answer. Resets can still be scheduled without a rise. The contractual ceiling may not be reached when too few resets remain or the periodic cap is zero.
Does the path predict the future index plus margin?
No. It assumes each allowed upward adjustment is taken until the ceiling, only within the remaining loan term. Actual indexed rates may differ. The complete event table can contain up to 54 resets; the peak is not limited to the first five. Other cadences, interest-only terms, payment caps, negative amortization, downward caps and rate floors need another compatible model.
Do positive intro savings make the ARM the better loan?
No. The amount is fixed P&I minus ARM intro P&I across the full intro payment count; negative values are retained. It is not interest savings, equity-adjusted benefit or an overall cost winner. Other charges can differ, and future refinancing is not assured. This stress does not determine the lender's qualification method or approve a borrower.
Where are the full path and source limits shown?
Read every reset in the result and PDF, not just five events. AI explains the complete 13-metric financial summary, not every event. CFPB CHARM distinguishes the intro period from reset frequency. The source was checked October 2, 2026; it does not verify your rates, caps, fees or loan approval. Confirm the note.