Cap

The limit on how much the interest rate or monthly payment on an adjustable rate mortgage (ARM) can go up or down

Most ARMs have several types of interest rate caps:
(1) lifetime caps, which are required by law, that limit the increase and decrease of a rate over the full course of a loan. A 12% lifetime cap, for example, means the ARM's rate can never go above 12%,
(2) the first adjustment cap, which limits the rate change on the ARM's initial adjustment and (3) the subsequent adjustment caps (also called periodic caps), which limit the rate changes on the following adjustment periods, even if the market interest rates significantly rise or fall during this time.

Caps on monthly payments are rare since they can cause negative amortization, a situation where your mortgage balance increases despite regular monthly payments.

See: Adjustable rate mortgage