ARM Cap Rate Calculator

An ARM's caps protect you against unlimited rate increases: initial cap (first reset), periodic cap (each subsequent), lifetime cap (above start rate). This calculator finds the worst-case scenario — absolute maximum rate and payment.

Start rate %

Initial cap %

Periodic cap %

Lifetime cap %

Loan balance

Amortization months

Lifetime max rate

10.00%

First reset max rate

7.00%

Max monthly payment

$3,510

Starting monthly payment

$2,147

Worst-case payment shock

$1,363

How the math works

5% start with 2/2/5 caps: max first reset = 7%, lifetime max = 10%. On $400K: payment can jump from $2,147 to $3,510 — $1,363/mo shock in worst case.

Underwrite to the lifetime cap. If the worst-case payment breaks your budget, choose fixed. If you can handle it, ARM savings early years often win.

How to Use

Enter start rate, initial cap, periodic cap, and lifetime cap.
Enter balance and amortization to see worst-case monthly payment.

Frequently Asked Questions

What's the 5/2/5 structure?

5% initial cap, 2% periodic cap, 5% lifetime cap. Most common structure. Start 5% → max 10% lifetime. Each year-to-year move capped at 2%.

Can caps be hit?

Initial cap almost always hits in rising-rate environments. Lifetime cap is rare (would require sustained large rate spike). Periodic cap hits in choppy markets.

What's my worst-case monthly?

Calc with lifetime cap applied. For 5/1 ARM at 4% start with 5/2/5: worst is 9% (4+5). On $400K balance, jumps from $1,910 to $3,218 — $1,300/mo shock.