A fixed-rate mortgage is a home loan with a static, consistent interest rate throughout its entire term. Because its rate remains the same over the life of the loan, it makes monthly payments predictable and reliable. It’s currently one of the most common mortgage products on the market.
How a Fixed-rate Mortgage Works
Fixed rate mortgages are designed for long-term homebuyers and typically come in 10-, 15-, 20- and 30-year terms. Though you don’t have to stay in your home for the entirety of the loan, your mortgage will be structured as if you plan to, with your loan payments spread out over the course of 10 to 30 years.
With fixed rate mortgages, the name of the game is consistency. When you lock in your interest rate during your initial loan application, this is the rate you’ll enjoy for the entire life of your loan, whether it’s a 10-year, 15-year, 30-year or other term product. The only way your interest rate will change is through refinancing. Check out our Guide to Refinancing to learn more about the benefits of this process and when (and why) you might want to do it.
Pros and Cons of a Fixed-rate Mortgage
Is a Fixed-rate Mortgage Right for You?
Fixed-rate mortgages are best for homebuyers who:
- Want a consistent, reliable monthly payment
- Have fluctuating or unreliable income
- Need the ability to budget
- Intend to stay in their home for 10 to 30 years
They’re not ideal for buyers who:
- Are only in their home for a short duration
- Need lower up-front costs