Fixed-Rate Mortgage
A fixed-rate mortgage has an interest rate that stays the same for the entire loan term — your principal and interest payment never changes. The most common terms are 30 years and 15 years. Fixed-rate mortgages offer predictability and protection against rising rates, making them the most popular mortgage type in the U.S.
On a 30-year fixed mortgage of $400,000 at 7.0%, your principal and interest payment is $2,661 in month one and remains $2,661 in month 360. Your total interest paid over 30 years would be approximately $558,036 — considerably more than the $400,000 you borrowed. A 15-year term at 6.5% would cost $3,488/month but only $227,840 in total interest, saving over $330,000 — though the higher payment requires a stronger monthly income.
Fixed rates are priced based on 10-year Treasury yields and mortgage-backed securities spreads. When the economy weakens or inflation falls, fixed rates tend to drop. In the 2021–2022 period, 30-year rates hit historic lows near 2.65%; by 2023, they peaked above 8% for the first time in 23 years. Locking in a rate removes this uncertainty entirely.
The tradeoff versus ARMs is that fixed-rate loans carry slightly higher initial rates. But for buyers who plan to stay long-term or who value budgetary certainty, the modest premium for a fixed rate is usually worth it.
Key Takeaway
A fixed-rate mortgage has an interest rate that stays the same for the entire loan term — your principal and interest payment never changes. The most common terms are 30 years and 15 years. Fixed-rate mortgages offer predictability and protection against rising rates, making them the most popular mortgage type in the U.S.
Related Terms
Frequently Asked Questions
A 15-year loan saves significantly on interest and builds equity faster, but requires higher payments. A 30-year loan offers lower payments and flexibility but costs more over time.
Yes. Most fixed-rate mortgages have no prepayment penalty. Paying extra principal reduces your balance and shortens your loan term.
Nothing — your rate and payment are locked in for the life of the loan. Rising rates only affect new borrowers, not those with existing fixed-rate mortgages.
Compare Mortgage Rates Today
Now that you know what fixed-rate mortgage means, see how it affects your bottom line.
See Rates →