Adjustable Rate Mortgage ( ARM ) - A mortgage in which the interest rate and payment changes periodically over the life of the loan based on changes in a specified index. The changes are usually subject to a cap .

Adjustable rate mortgage loans are covered by regulations that require, at a minimum, disclosure of the circumstances under which the rate may increase, any limitations on the increase, the effects of an increase and an example of the payment terms that would result from an increase.