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A 5/1 ARM has caps of 2/2/5 and a start rate of 6.00%. What is the most the rate can ever be?
In 2/2/5 cap notation, the first number is the initial adjustment cap, the second the periodic cap, and the third the lifetime cap over the start rate. The lifetime maximum is 6.00% + 5.00% = 11.00%. 8.00% is only the most it can reach at the first adjustment; 13.00% and 15.00% stack the adjustment caps on top of the lifetime cap. Source: Mortgage industry terminology; ARM cap structure; 12 CFR 1026.19(b)(2)(vii) (as at 11 Oct 2026).
Reading the first cap as the lifetime cap.
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