# Margin (ARM)

> An ARM margin is the fixed number of percentage points added to the index to set your adjustable rate. It never changes, so compare it before you sign.

URL: https://mail.mortgage-math-us.com/glossary/arm-margin/  
Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team

## Quick answer

**The margin** is the number of percentage points the lender adds to the [index](https://mail.mortgage-math-us.com/glossary/arm-index/) to set the rate on an adjustable-rate mortgage after its fixed period. It is written into the loan agreement and doesn’t change after closing.

## Key facts

| Fact | Value | Source | As of |
|---|---|---|---|
| Index on Fannie Mae ARMs | 30-day average SOFR | [Fannie Mae Selling Guide B2-1.4-02](https://selling-guide.fanniemae.com/sel/b2-1.4-02/adjustable-rate-mortgages-arms) | Dec 10, 2025 |
| Caps on a 5/6 ARM (first/periodic/lifetime) | 2/1/5 | [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) | Oct 1, 2021 |

## Why the margin outlasts the starting rate

The starting rate lasts a few years; the margin applies at every reset for the rest of the loan. Two ARMs with the same starting rate can cost very different amounts later if their margins differ, and margins vary by lender and loan.

## Example: two margins, same start

Two $300,000 5/6 ARMs both start at an example 6.5%, and $280,833 is owed when the fixed period ends. Suppose the index (30-day average SOFR on Fannie Mae loans) is 4.5% at the first reset:

| Margin | New rate | New payment |
|---|---|---|
| 2.75 points | 7.25% | $2,030 |
| 3.25 points | 7.75% | $2,121 |

The higher margin costs $91 a month, or $1,096 a year, at that index level — and the gap returns at every adjustment. Both resets stay under the initial cap in 2/1/5.

## Where to find it

The margin is listed with the index in the Adjustable Interest Rate (AIR) table on page 2 of the [Loan Estimate](https://mail.mortgage-math-us.com/glossary/loan-estimate/). Compare it alongside the [rate caps](https://mail.mortgage-math-us.com/glossary/rate-caps/) when shopping for an [adjustable-rate mortgage](https://mail.mortgage-math-us.com/glossary/adjustable-rate-mortgage/); the [fixed vs adjustable guide](https://mail.mortgage-math-us.com/loan-types/fixed-vs-adjustable-rate/) and [ARM risks explained](https://mail.mortgage-math-us.com/blog/arm-risks-explained/) walk through the rest.

## Sources

- [Fannie Mae Selling Guide B2-1.4-02](https://selling-guide.fanniemae.com/sel/b2-1.4-02/adjustable-rate-mortgages-arms) — Index on Fannie Mae ARMs (Dec 10, 2025)
- [Fannie Mae Standard ARM Plan Matrix](https://singlefamily.fanniemae.com/media/6951/display) — Rate caps on a Fannie Mae 5/6 ARM (first/periodic/lifetime) (Oct 1, 2021)
- [CFPB: For an ARM, what are the index and margin, and how do they work?](https://www.consumerfinance.gov/ask-cfpb/for-an-adjustable-rate-mortgage-arm-what-are-the-index-and-margin-and-how-do-they-work-en-1949/)

_General information, not financial advice._