ARM Stress Test
An adjustable-rate mortgage starts cheap, then resets. This tool shows the worst-case monthly payment your rate caps actually permit — so you can decide whether you could still afford the loan after it adjusts.
Your ARM
Caps are in percentage points (pp) added on top of your rate. The fully-indexed rate is index + margin — the realistic long-run rate the loan drifts toward.
Worst-case payment
Payment scenarios
| Scenario | Rate | Monthly payment | Change vs. initial |
|---|
How this works
During the fixed period your payment is fixed, amortized over the full term at the initial rate. When the fixed period ends, the rate can reset. Rate caps set the ceiling on how far it can move:
- Initial cap — the most the rate can jump at the first adjustment.
- Periodic cap — the most it can move at each later adjustment.
- Lifetime cap — the most the rate can ever rise above the initial rate.
The stress test walks the worst-case path: the rate rises by the maximum allowed cap at every adjustment until it hits the lifetime ceiling (initial rate + lifetime cap). Each new payment is re-amortized over the remaining term on the balance left at that point. We also show a "likely" case using your fully-indexed rate (index + margin), which is where a loan typically settles if market rates hold. Adjustments are modeled annually for clarity; a modern 5/6 ARM adjusts every 6 months, which reaches the same lifetime maximum, just sooner.
This is a payment stress test, not a prediction. Caps define the ceiling; the actual reset rate depends on the underlying index (SOFR) plus your margin at each reset date, and could land anywhere from your initial rate up to the lifetime maximum. Educational estimate only — not financial advice.