On an Adjustable-Rate Mortgage (ARM), the limit on how much the interest rate can change within a certain period of time; either at each adjustment period or over the life of the loan.

Rate caps are often expressed in an a\b\c sequence:

• "a" is the maximum rate change at the first rate adjustment.
• "b" is the maximum at all subsequent adjustments.
• "c" is the maximum increase over the initial rate during the life of the contract.