Lifetime adjustment cap

Lifetime adjustment cap

A lifetime adjustment cap is typically used with adjustable rate mortgages (ARMs). This cap determines how much the interest rate can increase in total, over the life of the loan. For example, if this cap is five percent, that means the rate can never be five percentage points higher than the initial rate. Some lenders may have a different or higher cap. Understand how the index factors into adjustable-rate mortgage loans (cfpb.gov/askcfpb/194 9).