A 10/1 ARM is a 30-year adjustable rate mortgage that has a fixed interest rate for the first ten years and then adjusts once per year for the remaining twenty years. The "10" refers to the length of time in years that the rate is locked, and the "1" indicates how often the rate will adjust after that.

What will be the monthly payments after ten years?

The interest rates on loans are adjusted to an index and then increased by a fixed margin set out in the contract, resulting in a fully-indexed rate. These rates are subject to any applicable cap restrictions. As the bank will then recalculate the remaining loan amount at the new rate, your monthly payment will usually increase.

How high can interest rates and monthly payments go?

The cap is set by the lifetime cap which usually means a maximum increase of 5 points over your original rate. If your original rate was 6.5 per cent and the lifetime cap is 5 points, then your interest can't go above 11.5 per cent. The monthly rate shown is based on the scenario where interest goes up to that cap.

Is a 10/1 ARM A Good Choice?

If you plan to sell or refinance your home in about ten years, or if you expect an increase in income, this may be a good option. You'll benefit from a lower initial interest rate and possibly no rate adjustments. If you want to keep the house long term, there is more risk because the monthly payment could jump significantly after the fixed-rate period ends.

What's the difference between a 10/1 ARM and a 10/6 ARM?

Both have a fixed interest rate for the first ten years. After that, the 10/1 ARM will adjust annually and the 10/6 ARM will adjust semi-annually, with the latter usually tied to an SOFR index. While the 10/6 ARM is potentially subject to faster and more frequent interest rate changes, both products are limited by maximum interest rates that apply for each product.

10/1 ARM Calculator

Your loan

Loan amount

Initial interest rate

Loan term

Initial fixed-rate period

After the fixed period

Index rate

Margin

First adjustment cap

Periodic adjustment cap

Lifetime cap

Compare with a fixed loan

Compare with a 30-year fixed loan

Add a fixed-rate mortgage side by side to see the trade-off.

What you would pay

Initial monthly payment (P&I)

Payment after the first adjustment

Highest possible payment

After the fixed period your payment could rise from

$1,516.96 to as much as $2,169.79 a month.

Initial monthly payment

Balance when the rate first adjusts: $
Fully-indexed rate: %
First adjusted rate: %

Maximum interest rate: %
Total interest (expected): $
Total of all payments: $

Payment schedule

Show the payment-over-time chart

Plot how the monthly payment steps up after the fixed period.

Show the year-by-year schedule

A full table of the rate, payment, interest, and balance each year.

Year-by-year schedule on the expected rate path
Year	Rate (%)	Monthly payment ($)	Interest ($)	Principal ($)	End balance ($)
1	6.5	1,516.96	15,521.02	2,682.54	237,317.46
2	6.5	1,516.96	15,341.36	2,862.2	234,455.26
3	6.5	1,516.96	15,149.68	3,053.88	231,401.38
4	6.5	1,516.96	14,945.15	3,258.41	228,142.97
5	6.5	1,516.96	14,726.93	3,476.63	224,666.35
6	6.5	1,516.96	14,494.09	3,709.46	220,956.88
7	6.5	1,516.96	14,245.67	3,957.89	216,998.99
8	6.5	1,516.96	13,980.6	4,222.96	212,776.03
9	6.5	1,516.96	13,697.78	4,505.78	208,270.24
10	6.5	1,516.96	13,396.02	4,807.54	203,462.7
11	7.05	1,583.56	14,190.6	4,812.07	198,650.63
12	7.05	1,583.56	13,840.17	5,162.5	193,488.13
13	7.05	1,583.56	13,464.22	5,538.45	187,949.67
14	7.05	1,583.56	13,060.89	5,941.78	182,007.89
15	7.05	1,583.56	12,628.19	6,374.48	175,633.41
16	7.05	1,583.56	12,163.98	6,838.69	168,794.72
17	7.05	1,583.56	11,665.97	7,336.71	161,458.01
18	7.05	1,583.56	11,131.69	7,870.99	153,587.02
19	7.05	1,583.56	10,558.49	8,444.18	145,142.83
20	7.05	1,583.56	9,943.56	9,059.11	136,083.72
21	7.05	1,583.56	9,283.85	9,718.83	126,364.89
22	7.05	1,583.56	8,576.09	10,426.59	115,938.31
23	7.05	1,583.56	7,816.79	11,185.88	104,752.42
24	7.05	1,583.56	7,002.2	12,000.48	92,751.95
25	7.05	1,583.56	6,128.29	12,874.39	79,877.56
26	7.05	1,583.56	5,190.73	13,811.94	66,065.62
27	7.05	1,583.56	4,184.9	14,817.77	51,247.84
28	7.05	1,583.56	3,105.82	15,896.85	35,350.99
29	7.05	1,583.56	1,948.16	17,054.51	18,296.48
30	7.05	1,583.56	706.2	18,296.48	0

A 10/1 ARM is a type of mortgage with an adjustable interest rate. It has a fixed interest rate for the first ten years, and then the interest rate adjusts annually for the remainder of the loan term. This calculator allows you to calculate your monthly payments for the first ten years, how much your monthly payment could change after the first adjustment, and what the maximum possible increase would be in the worst case scenario. By entering your loan information and the terms of the interest rate adjustments, you can see how your payments will change over the life of the loan.

What is a 10/1 ARM?

Since most ARM loans have a term of 30 years, a 10/1 ARM has a fixed interest rate for the first ten years and then adjusts annually for the remaining twenty years.

The initial interest rate is usually slightly lower than comparable 30-year fixed-rate mortgages. The borrower can save on upfront costs but accepts the uncertainty of future rates in return. This structure may be beneficial if you plan to sell or refinance within ten years, or expect a higher income.

How does interest rate adjustment work after ten years?

After the fixed rate period ends, your new interest rate will be determined by two factors: an index, such as SOFR, is a publicly available reference rate that fluctuates based on market conditions. The margin amount is a set value added to the index by your financial institution and remains constant throughout the life of the loan. The sum of the index and the margin determines the actual interest rate for this loan.

A rate cap is a mechanism that prevents the adjustment range from becoming too large. It is usually expressed in three numbers, such as 5/2/5. The first number represents the maximum increase on the first rate adjustment; the second number represents the maximum increase on all subsequent adjustments; and the third number is the "lifetime cap", which is the maximum total increase over the original rate. If a rate cap of 5/2/5 applies, and the initial rate is 6.5 percent, then the rate can never exceed 11.5 percent.

How to use this calculator:

First enter the loan amount, initial interest rate, term and fixed-rate period. The calculator will calculate the initial monthly payment that is made for the first ten years. Then enter the terms of the indexation. The reference rate plus the markup gives the fully-indexed rate, and the three caps limit both how quickly and the overall extent to which the rate can rise.

The results show three types of monthly rates that you should pay attention to. The initial monthly rate is for the fixed-rate period. The adjusted monthly rate is what you'll pay after adjusting to the fully-indexed interest rate. The maximum monthly rate shows the worst-case scenario, where the interest rate increases at the fastest pace within each cap until it hits the lifetime cap. By turning on the comparison with a fixed rate, you can see how they differ from a typical 30-year mortgage and get some help deciding.

The formula for calculating monthly rate:

The monthly rate is calculated each time using a standard amortization formula that evenly divides the remaining loan amount by the agreed number of monthly installments.

M = P \cdot \frac{i(1 + i)^{n}}{(1 + i)^{n} - 1}

M is the monthly payment amount and interest, P is the remaining balance of the loan, i is the monthly interest rate (annual interest rate divided by 12), and n is the number of remaining payments. With an ARM this calculation will be done multiple times. Each time the interest rate changes, the new interest rate is applied to the then-current remaining balance, and the monthly payment amount is recalculated. This recalculation can cause the monthly payment amount to change significantly.

Suppose you take out a $240,000 loan with an initial interest rate of 3.822 percent, a 30-year term and a (10/1) ARM model. The first adjustment is for two points, then one point per year thereafter, up to a maximum increase of five points. Your initial monthly payment would be about $1,121. After ten years the balance would be about $187,900 and your monthly payment after the first adjustment would be about $1,327. If the interest rate reached its maximum of 8.822 percent, your monthly payment would be about $1,642, which is about $520 higher than initially.

Symbol	Meaning	Example
P	Balance being repaid	240,000
i	Monthly interest rate	0.03822 / 12
n	Payments remaining	360
M	Monthly principal and interest	result

Comparison between an ARM loan (10/1) and a fixed rate mortgage over 30 years:

With a fixed rate mortgage the interest rate and monthly payment remain the same over the entire 30 year term. The monthly burden is always known, and there is the possibility of refinancing if market rates fall, though the initial rate will usually be higher. An adjustable rate mortgage (ARM) works in reverse: for the first ten years the monthly payments are lower and more stable, but then they adjust to market rates. If the difference between fixed and variable rates is large, ARMs can provide substantial savings on up-front costs. If the difference is small, the security of a fixed rate mortgage will usually be valued over the slight savings.

An ARM (10/6) is also common on the market. Again, a fixed rate for the first ten years but then it adjusts not annually but every six months and usually based on SOFR. The more frequent adjustments mean that your monthly payment can change faster, though the range of fluctuations will still be limited by the caps in place.

10/1: Who is the ARM suitable for and what are the risks to be aware of?

This type of loan is suitable for people who do not want to keep it until the end of the term. If you plan on moving or refinancing within ten years, you can take advantage of a low introductory rate without actually experiencing an interest rate hike. It's also good for buyers who expect their income to increase in the future as they will be able to more easily afford higher monthly payments later on.

The main risk is a sudden increase in monthly payments. After the fixed-rate period ends, an increase in market interest rates can cause your monthly payment to jump by hundreds of dollars. Also, some ARMs may not decrease their rate even if market rates fall. Be sure to calculate the maximum possible monthly payment before you sign and make sure that you'll be able to afford it if there's a rate adjustment during the loan term.

This calculator is for general education and planning purposes only, not financial advice. It does not include property taxes, insurance, PMI (Private Mortgage Insurance), HOA fees (Homeowners Association) or closing costs. Actual rates, limits, indices, and payments may vary by lender and loan terms. Consult a qualified professional before entering into any mortgage commitment.

Frequently asked questions

10/1 What is an ARM?: A 10/1 ARM is a 30-year adjustable rate mortgage that has a fixed interest rate for the first ten years and then adjusts once per year for the remaining twenty years. The "10" refers to the length of time in years that the rate is locked, and the "1" indicates how often the rate will adjust after that.
What will be the monthly payments after ten years?: The interest rates on loans are adjusted to an index and then increased by a fixed margin set out in the contract, resulting in a fully-indexed rate. These rates are subject to any applicable cap restrictions. As the bank will then recalculate the remaining loan amount at the new rate, your monthly payment will usually increase.
How high can interest rates and monthly payments go?: The cap is set by the lifetime cap which usually means a maximum increase of 5 points over your original rate. If your original rate was 6.5 per cent and the lifetime cap is 5 points, then your interest can't go above 11.5 per cent. The monthly rate shown is based on the scenario where interest goes up to that cap.
Is a 10/1 ARM A Good Choice?: If you plan to sell or refinance your home in about ten years, or if you expect an increase in income, this may be a good option. You'll benefit from a lower initial interest rate and possibly no rate adjustments. If you want to keep the house long term, there is more risk because the monthly payment could jump significantly after the fixed-rate period ends.
What's the difference between a 10/1 ARM and a 10/6 ARM?: Both have a fixed interest rate for the first ten years. After that, the 10/1 ARM will adjust annually and the 10/6 ARM will adjust semi-annually, with the latter usually tied to an SOFR index. While the 10/6 ARM is potentially subject to faster and more frequent interest rate changes, both products are limited by maximum interest rates that apply for each product.

Related calculators

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Disclaimer: This calculator is provided for general informational and educational purposes only. Our calculators are under active development, and results may be inaccurate, incomplete, or unsuitable for your situation. Always verify the figures independently and seek advice from a qualified professional before relying on them. We make no warranties and accept no liability for any loss or decision arising from use of this tool.

References

Consumer Financial Protection Bureau: Consumer Handbook on Adjustable-Rate Mortgages
Federal guide to how ARMs, indexes, margins, and caps work.
Investopedia: Adjustable-Rate Mortgage (ARM)
Definition, structure, and worked examples for adjustable-rate mortgages.