What is an FHA 3/1 ARM mortgage?

An FHA 3/1 ARM is an FHA-insured adjustable-rate mortgage. The interest rate is fixed for the first 3 years, then adjusts annually based on the 1-Year Constant Maturity Treasury (CMT) index plus a fixed margin. FHA ARMs also require both an upfront mortgage insurance premium and an annual mortgage insurance premium.

What are the rate caps on an FHA 3/1 ARM?

A typical FHA 3/1 ARM has a 1% annual adjustment cap and a 5% lifetime cap. That means the rate can increase by up to 1 percentage point per year after the initial 3-year fixed period, and no more than 5 percentage points total over the life of the loan.

What index does an FHA 3/1 ARM use?

FHA adjustable-rate mortgages use the 1-Year Constant Maturity Treasury (CMT) index, published by the Federal Reserve. Your new rate is calculated as the CMT index plus your lender's fixed margin.

Does an FHA ARM have mortgage insurance?

Yes. FHA loans require an upfront mortgage insurance premium (typically 1.75% of the base loan amount, which can be financed) and an annual mortgage insurance premium (commonly 0.55% per year for most 30-year FHA loans). Unlike conventional PMI, the annual MIP generally cannot be canceled based on equity alone and typically lasts for the life of the loan if the down payment is less than 10%.

_{FHA 3/1 ARM Calculator 2026}

_{Estimate your FHA adjustable-rate mortgage payments – initial fixed period + annual adjustments + MIP}

New to FHA ARMs? Read how FHA 3/1 ARMs work - fixed period, 1% annual / 5% lifetime caps, upfront and annual MIP, and who benefits most.

_{Our free FHA 3/1 ARM calculator helps you forecast FHA-insured adjustable-rate mortgage payments after three years of fixed rates - including both the upfront MIP (typically financed) and the annual MIP that appears in your monthly payment. Use it to see how extra payments or interest-only options impact your loan balance and long-term interest costs. If you're comparing loan types, see our
conventional 3/1 ARM calculator or read
is a conventional mortgage better than FHA.}

Basic Loan Information

Base Loan Amount ($)

Initial Interest Rate (%)

Loan Term (Years)

FHA 3/1 ARMs are 30-year loans. The base loan amount is the amount financed before the upfront MIP is added.

FHA Mortgage Insurance (MIP)

Upfront MIP (%)

Annual MIP (%)

Finance the upfront MIP into the loan balance

Note: Upfront MIP is typically 1.75% of the base loan amount and can be financed. Annual MIP is commonly 0.55% per year for most 30-year FHA loans with less than 10% down, and is added to your monthly payment.

ARM Adjustment Details

Note: The boxes below are for illustration purposes. You may adjust the values to match your specific FHA loan terms.

Adjustment Frequency after initial fixed period

Note: The calculation boxes below are for illustration purposes. You can edit any field to explore different scenarios, and the totals will automatically update.

Margin + Index = Interest Rate

Margin (%)

Index (%)

Interest Rate (%)

FHA ARMs use the 1-Year Constant Maturity Treasury (CMT) index. Typical FHA margin is 2.00%.

Current Interest Rate + Annual Cap = Interest Rate

Current Interest Rate (%)

Annual Cap (%)

Interest Rate (%)

Lifetime Interest Rate Cap (%)

Annual Rate Cap (%)

Tip: Typical FHA 3/1 ARM caps are 1% annual and 5% lifetime. Enter your lender's actual caps - the yellow formula box above will mirror your Annual Cap, and the payment results and captions below will update to match.

Optional Settings

Interest-only payments during initial fixed period

Extra Principal Payment ($/month)

Payment Summary

Initial Monthly Payment

Includes P&I + annual MIP for the first 3 years

First Adjustment Payment

Year 4 payment (rate + annual cap)

Maximum Payment

At lifetime cap (initial rate + lifetime cap)

Total Interest (Worst-Case)

Based on annual cap increases to the lifetime cap

Total MIP Paid

Upfront MIP + annual MIP over the life of the loan

Total Loan Amount

Base loan + financed upfront MIP

Amortization Schedule (Worst-Case Scenario)

Shows rates increasing by your annual cap after year 3, up to the lifetime cap. MIP column shows annual MIP portion of each payment.

Year	Rate	Monthly P&I	Monthly MIP	Principal	Interest	Balance

How to Find the Current Index Rate for Your FHA 3/1 ARM

Understanding how your FHA adjustable-rate mortgage is calculated doesn't have to be confusing. The boxes above show exactly how your new interest rate is determined: Index + Margin = Interest Rate. FHA ARMs use the 1-Year Constant Maturity Treasury (CMT) index - not SOFR. Here are the best sources:

Official Index Rate Sources

1. Federal Reserve Bank of St. Louis (FRED) - FHA Standard Index
1-Year Treasury Constant Maturity Rate (DGS1): https://fred.stlouisfed.org/series/DGS1
In the top-left corner, under "Observations," you'll see the current index rate. This is the index used for most FHA adjustable-rate mortgages. As of this writing, the rate is approximately 3.59%.

2. U.S. Department of the Treasury
Daily Treasury Par Yield Curve Rates: https://home.treasury.gov/resource-center/data-chart-center/interest-rates/
Look for the 1 Yr column. This is the same CMT figure reported by FRED.

Pro Tip: Enter the index rate in the box above. Your lender will provide the margin - the additional percentage they charge - which remains fixed for the life of the loan. Index + Margin = Your Interest Rate. Typical FHA margins are around 2.00%.

Understanding Rate Caps on an FHA 3/1 ARM

What happens if the index rate spikes? That's where rate caps protect you. FHA 3/1 ARMs typically have a 1% annual adjustment cap and a 5% lifetime cap. Enter your loan's actual caps in the calculator above - the payment results and captions will update to match. Then review the worst-case amortization schedule to see how payments could adjust over time.

Important: When Does the Rate Adjust?

Ask the lender when the new interest rate is calculated. For example: The lender calculates the new rate at the end of the initial term (after 3 years for a 3/1 ARM), and the new rate will apply for the next adjustment period.

FHA MIP vs. Conventional PMI - The Key Difference

This is the biggest difference between an FHA ARM and a conventional ARM. Both loans require mortgage insurance if you put less than 20% down, but the rules are very different:

Feature	FHA 3/1 ARM	Conventional 3/1 ARM
Insurance Type	Mortgage Insurance Premium (MIP)	Private Mortgage Insurance (PMI)
Upfront Cost	1.75% of base loan (can be financed)	None (typically)
Monthly Cost	Annual MIP (commonly 0.55%/yr for 30-yr loans)	PMI (varies by lender and credit score)
Can It Be Removed?	Generally only by refinancing out of FHA (if down payment < 10%)	Yes - once you reach 20% equity
Index	1-Year CMT	SOFR (or 1-Year CMT for some lenders)
Typical Margin	~2.00%	~2.50%
Typical Caps	1% annual / 5% lifetime	2% annual / 5% lifetime

Is an FHA 3/1 ARM Right for You?

This FHA 3/1 ARM calculator is designed to help you clearly understand how an FHA-insured adjustable-rate mortgage works - and to give you the confidence to manage it wisely. Before committing to any ARM, review the pros and cons of a conventional loan and our comparison of FHA vs. conventional loans to see which might better suit your long-term plans.

You can also use our conventional loan monthly payment calculator to compare scenarios. For different ARM terms, explore our conventional 3/1 ARM calculator, 5/1 ARM calculator, and 7/1 ARM calculator.

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