Index (ARM)
Direct definition
A published benchmark rate used to calculate an adjustable-rate mortgage's new rate at each adjustment.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
Common indexes include SOFR and CMT. At each adjustment, the ARM rate equals the index plus a fixed margin, subject to caps.
Why it matters
The index is the movable piece of your ARM rate — where it goes largely determines whether payments rise or fall.
Where you may see it
- ARM disclosure
- Mortgage note
- Rate adjustment notice
A real-world example
If the index is 4.5% and the margin is 2.75%, the fully indexed rate at adjustment is 7.25% (subject to caps).
Educational and illustrative only
A common misunderstanding
The index is not set by your lender — it's a published, independent benchmark rate the loan references.
Ask Vabasso AI
This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.
- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026