Start rate

Start rate is the beginning interest rate of an adjustable-rate mortgage (ARM) loans, it is the interest rate for the first period, as the ARM rate will be adjusted in subsequent periods. The start rate is usually lower than current market rates, in order to help the applicant qualify for a larger loan amount.

3-2-1 and 2-1 buydowns are two common mortgage buydown structures. In a 3-2-1 buydown, the buyer obtains a lower interest rate for the first three years. In a 2-1 buydown, reduction is only available for the first two years.