SESKStuff Everyone Should Know
SESK: Stuff Everyone Should Know · sesk.info/home-arm-index-margin

On an adjustable-rate mortgage, how is your new rate figured after the teaser period?

Index plus margin, within any rate caps.

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  1. Your current credit score
  2. The index plus the margin ✔
  3. The lender's yearly average rate

Why: The index moves with market rates. The margin is a number your lender sets in your loan. Add them together for your new rate, subject to any caps.

Huh, didn't know that: The margin is set in your loan agreement and does not change after closing.

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References

Answer: The index plus the margin. The index moves with market rates. The margin is a number your lender sets in your loan. Add them together for your new rate, subject to any caps.

  1. CFPB: ARM index and margin www.consumerfinance.gov/ask-cfpb/for-an-adjustable-rate-mortgage-arm-what-are-the-index-and-margin-and-how-do-they-work-en-1949
    Index + Margin = Your Interest Rate (subject to any rate caps)
    Checked 2026-10-10.
  2. CFPB: ARM rate caps www.consumerfinance.gov/ask-cfpb/what-are-rate-caps-with-an-adjustable-rate-mortgage-arm-and-how-do-they-work-en-1951
    This cap is most commonly five percent
    Checked 2026-10-10.

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