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Pay Option ARM Calculator

{ Using This Calculator ~ Examples }

Types of Mortgage Loans: Option ARM: Pay Option ARM Calculator

Pay Option ARM Calculator

Step 1: Compute minimum payment, interest-only payment, fully amortizing 30-year, 15-year, 40-year payment.

Option ARM Loan Amortization { you must be done with Step 1 }

Step 2: Create a complete amortization table and see what happens if you always select the minimum payment option.

Loan Terms
Loan Amount: $
Loan Term: Years
Adjustment Period:    { = Interest Rate Adjustment Period }
Minimum Payment Calculation Method (at origination)
1. The minimum payment is based on the original loan amount amortized over the original loan term using the start rate. This method is used with the most common form of option ARM with monthly rate adjustments that begin within 1 or 3 months of origination.
Initial Rate: %   { = Minimum Payment Rate }
2. The minimum payment is calculated as a percent of the fully amortizing payment. The fully amortizing payment is computed using the start rate. This (2) and the next (3) methods may be used with hybrid option ARMs.
Initial Rate: %   { = Amortizing Payment Rate }
Discount Percentage: of the fully amortizing payment
3. The minimum payment is calculated using the minimum payment rate, that is set at several points below the start rate.
Initial Rate: %   { = Amortizing Payment Rate }
Discount: below the start rate
Minimum Payment Change Cap
Payment Cap:
Initial Fixed Rate Period / Initial Fixed Payment Period*
* Both periods may be the same (usually 3, 5 or 7 years) with hybrid option ARMs.
Introductory Period:    { = Initial Fixed-Rate Period }
Fixed Pmt Period:    { = Initial Fixed Minimum Payment Period }
Fully Indexed Rate Calculation and Rounding Rules
Index: The Current Index (when the 1st pmt is due) is:
0.114 (MTA as of November 2014)
0.1548 (1-Month LIBOR as of November)
0.3268 (6-Month LIBOR as of November)
0.5621 (1-Year LIBOR as of November)
0.000 (CODI as of November)
0.671 (COFI as of October)
4.79 (COSI as of September)
Margin: %
Rounding: FIR = {index + margin} rounded to the nearest 0.001
FIR = {index + margin} rounded to the nearest 0.125
Loan Recast Schedule
Initial Loan Recast: when the monthly payment is due
Subsequent Recasts: every years thereafter
Neg-Am Recast Rules
Payment Required:

Minimum Payment Rate: 1.250%

Fully Indexed Rate (FIR): 2.864%

  • Minimum Payment: $666.50
  • Interest Only Payment: $477.33 (not available)
  • Fully Amortizing 30-Year Payment: $828.61
  • Fully Amortizing 15-Year Payment: $1,368.12
  • Fully Amortizing 40-Year Payment: $700.38 (not available)
Possible Minimum Payment Changes
(based on a 30-year loan term)
Year 1 $666.50 = Base of Minimum Payment
Year 2 $716.49 = $666.50 + 7.50%
Year 3 $770.22 = $716.49 + 7.50%
Year 4 $827.99 = $770.22 + 7.50%
Year 5 $890.09 = $827.99 + 7.50%
Payments Start On 
Payment Options* Period:
* After that, only fully amortizing payments are allowed.
Term of the Loan 
Loan Amount $ 
Adjustment Period:
Initial Rate  %
Initial Minimum Payment
Introductory Period**:
** The first interest rate change occurs when the 1st monthly payment is due
Initial Fixed Payment Period:
After that, the Min Payment changes:
Fully Indexed Rate (FIR)***  %
*** not rounded to the nearest 1/8 of one percentage (.125%)
Lifetime Cap  %
Lifetime Floor (= Margin %
Payment Change Cap 
Negative Amortization Cap  % (a.k.a. Balance Cap)
First Interest Change Cap 
Periodic Interest Change Cap 
The loan is recast when the 61st monthly payment is due
(or when the balance cap is exceeded)
and every 5 years thereafter.
Pmt required at negam recast:
Future Index Changes
 { MTA Forecast }
Starting From: Index Changes By: For:
Monthly Payment # % Per Month Months
Monthly Payment # % Per Month Months
Monthly Payment # % Per Month Months
Monthly Prepayments
Starting Date 
Prepayment Amount  $
Additional 1/12 of Monthly Payments
Annual Prepayments
Starting Date 
Prepayment Amount  $
Full Monthly Payment
One-time Prepayments
1.  Amount $ 
2.  Amount $ 

We can locate a Mortgage Professional offering pay option ARMs:

If you are looking for an option ARM and need more information or advice, we invite you to take advantage of our database of the most competitive lenders available. Just complete a short loan request form and the best lenders in your local area offering option ARM loan programs will contact you with their rates and fees.

{ Using This Calculator ~ Examples }

The calculation results are for illustrative purposes only and are not guaranteed to be accurate.

Mortgage professionals are welcome to participate!
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