This mortgage payment calculator provides customized information based on the information you provide. But, it assumes a few things about you. For example, that you’re buying a single-family home as your primary residence. This calculator also makes assumptions about closing costs, lender’s fees and other costs, which can be significant.
An adjustable-rate mortgage (ARM) is a home loan that starts out with a fixed interest rate, but after a period of time that rate becomes variable. They are also called variable-rate mortgages or floating mortgages.
Interest rates vary depending on the type of mortgage you choose. See the differences and how they can impact your monthly payment.
ARM loans often begin with a fixed-rate period that typically lasts from 5 to 10 years. After that initial period, the interest rate changes (or adjusts) each year. The variable rate fluctuates based on a reference interest rate (for U.S. Bank, this predetermined ARM index is as published in the Wall Street Journal), plus a set amount of interest above that index (called the ARM margin).
Adjustable-rate mortgages normally have a cap that limits how much the interest rate can increase over the life of the loan, and that cap is often 5%. That means that the interest rate can never be 5 percentage points higher than the initial interest rate.
An adjustable-rate mortgage has an interest rate that varies over the life of the loan, whereas a fixed-rate mortgage carries the same interest rate for the life of the loan.
After the initial fixed-rate interest period, the interest rate changes (or adjusts) each year. The variable rate fluctuates based on a reference interest rate (U.S. Bank uses a predetermined ARM index that’s published in the Wall Street Journal), plus a set amount of interest above that index (called the ARM margin).