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APR Calculator for Adjustable Rate Mortgages

Use this calculator to determine the Annual Percentage Rate (APR) of your Adjustable Rate Mortgage (ARM). Knowing your APR can help you compare different ARMs with different fees and terms. Use this calculator to help you decide which mortgage is best for you.

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Definitions

Adjustable Rate Mortgage (ARM)
This calculator shows a fully amortizing ARM which is the most common type of ARM. The monthly payment is calculated to payoff the entire mortgage balance at the end of the term. The term is typically 30 years. After any fixed interest rate period has passed, the interest rate and payment adjusts at the frequency specified. A Fully Amortizing ARM will also have a maximum rate that it will not exceed. Below is a list of the most common types of Fully Amortizing ARMs.

Common Adjustable Rate Mortgages
ARM TypeMonths Fixed
10/1 ARMFixed for 120 months, adjusts annually for the remaining term of the loan.
7/1 ARMFixed for 84 months, adjusts annually for the remaining term of the loan.
5/1 ARMFixed for 60 months, adjusts annually for the remaining term of the loan.
3/1 ARMFixed for 36 months, adjusts annually for the remaining term of the loan.
1 year ARMFixed for 12 months, adjusts annually for the remaining term of the loan.
Mortgage amount
Original or expected balance for your mortgage.

Term in years
The number of years over which you will repay this loan. The most common mortgage terms are 15 years and 30 years.

Starting interest rate
Initial annual interest rate for this mortgage.

Current index
The current interest rate of the index used to calculate the interest rate on this Adjustable Rate mortgage. The current index rate plus the margin on that rate produces the Fully Indexed Rate that is used to calculate the APR for this mortgage.

Margin
The interest rate percentage above the index, or the 'margin', used to calculate the Fully Indexed Rate.

Starting monthly payment
Monthly principal and interest payment (PI) based on your beginning balance and starting interest rate.

Months before first adjustment
This is the number of months that the interest rate is fixed. After this period, the interest rate will be subject to rate adjustments. If you enter zero in this field, we assume that the rate will begin making adjustments after initial period of time between adjustments has passed. If any number other than zero is entered, the first adjustment will take place at that time, and adjustments will happen at the frequency entered in the "months between adjustments" field.

Months between adjustments
The number of payment periods between potential adjustments to your interest rate. The most common is 12 months, which means your payment could change at most once per year.

Expected adjustment
The amount you believe that your mortgage's interest rate will change. This amount will be added to or subtracted from your interest rate.

Interest rate cap
This is the highest interest rate allowed by your mortgage. Your actual interest rate will not be adjusted above this rate.

Loan origination percent
The percent of your loan charged as a loan origination fee. For example, a 1% fee on a $120,000 loan would cost $1,200.

Points paid
Total number of "points" purchased to reduce your mortgage's interest rate. Each "point" costs 1% of your loan amount.

Other fees to include
Any other fees that should be included in the APR calculation. These fees can vary by lender, but at a minimum usually includes prepaid interest.