A fully amortizing ARM (adjustable rate mortgage) is a periodic loan payment, part of which is principal and part of which is interest, where if the borrower makes payment according to the loan's amortization schedule, the loan will be paid-off by the end of its set term.

If the loan is a fixed-rate loan, each fully amortizing payment will be equal an amount. If the loan is an adjustable-rate loan, the fully amortizing payment may change as the interest rate on the loan changes.

These payments are often associated with payment option ARMs which offer the borrower four different monthly payment options: a 30-year fully amortizing payment, a 15-year fully amortizing payment, an interest-only payment, and a minimum payment option.

The interest rate that can be charged on an ARM based on the current value of the index. The rate is calculated by adding the margin to the current value of the index.