Quick answer
Key facts
Which index your loan uses
The lender picks the index when you apply, and it generally stays the same for the life of the loan. Fannie Mae’s standard ARMs use the 30-day average SOFR. You’ll find the index and margin in the Adjustable Interest Rate (AIR) table on page 2 of the Loan Estimate and in your promissory note.
Example: index plus margin
Take a 5/6 ARM with an example starting rate of 6.5%, a margin of 2.75 percentage points and caps of 2/1/5, so the first reset can go no higher than 8.5%.
- If the index is 4.5% on the change date, the fully indexed rate is 7.25%, and that becomes your rate: 7.25%.
- If the index is 6.25%, index plus margin is 9%, but the initial cap holds the rate at 8.5%. Later resets can push it higher, up to the lifetime cap.
The index is the only part of the formula that moves, so it drives every payment change on an adjustable-rate mortgage. The fixed vs adjustable guide covers how to judge that risk.
Sources
- Fannie Mae Standard ARM Plan Matrix — Rate caps on a Fannie Mae 5/6 ARM (first/periodic/lifetime) (Oct 1, 2021)
- Fannie Mae Selling Guide B2-1.4-02 — Index on Fannie Mae ARMs (Dec 10, 2025)
- CFPB: For an ARM, what are the index and margin, and how do they work?
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.