[Definition] For ARMs where the index is applied to the interest rate of the note on an "index plus margin" basis, the margin is the difference between the note rate and the index on which the note rate is based expressed in percentage terms.[1] This is not to be confused with profit margin. The lower the margin the better the loan is to the borrower as the maximum rate will increase less at each adjustment. Margins will vary between 2% and 7%. [Term] 
Margin
X / Y
F u l l y I n d e x e d R a t e
M a r g i n
I n d e x
S t a r t R a t e
P e r i o d
F l o o r
P a y m e n t S h o c k
C a p