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Fixed-Rate Mortgage
Definition
A fixed-rate mortgage is a home loan with an interest rate that remains constant for the entire loan term.
Explanation
A fixed-rate mortgage offers predictable monthly payments because the interest rate never changes. Most fixed-rate mortgages have terms of 15 or 30 years. The 30-year option has lower payments but more total interest, while the 15-year has higher payments but significant interest savings.
These loans are ideal for buyers who plan to stay long-term and want payment certainty.
Example
A $350,000 home with a 30-year fixed mortgage at 6.5% has a monthly payment of $2,212 for principal and interest.