Margin
The fixed percentage a lender adds to the index to set an adjustable-rate mortgage's rate after the fixed period. Index + margin = your rate.
What does margin mean?
The margin is the lender's fixed markup on an ARM — for example 2.75% — that stays constant for the life of the loan. Once the fixed period ends, your rate is the current index plus this margin. Because the margin never changes, it is worth comparing between lenders: a lower margin means a lower rate at every future adjustment, no matter where the index sits.
Frequently asked
What is the margin on an ARM?
The margin is the fixed markup — say 2.75% — the lender adds to the index to set your rate after the fixed period.
It never changes, so a lower margin means a lower rate at every future adjustment; it is worth comparing between lenders.
Put it to use
Related terms
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