Annual percentage rate (APR): An expression of the effective interest rate that the borrower will pay on a loan, taking into account one-time fees. Annual percentage rate is the total cost of credit to the consumer, expressed as an annual percentage of the amount of credit granted.
Adjustable-rate mortgage (ARM): This calculator shows a fully amortizing adjustable-rate mortgage, which is the most common type of ARM. The monthly payment is calculated to pay off 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 type	Months fixed
10/1 ARM	Fixed for 120 months, adjusts annually for the remaining term of the loan.
7/1 ARM	Fixed for 84 months, adjusts annually for the remaining term of the loan.
5/1 ARM	Fixed for 60 months, adjusts annually for the remaining term of the loan.
3/1 ARM	Fixed for 36 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, or 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 the 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.