Fixed-rate mortgage
A mortgage where the interest rate stays the same for the whole loan. Payments don't change. The most common type in the U.S. for good reason: predictability.
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Part 1 of 4
Why a seller cares
Most buyers arrive with a fixed-rate loan, which is the simplest kind for a seller to understand: the payment they qualified for is the payment they will make. It also matters when you finance the next home.
Part 2 of 4
A simple example
The buyer of your home takes a 30-year fixed at 6.5% on $240,000. Their payment is about $1,517 a month for thirty years.
| The loan | What the buyer's payment does |
|---|---|
| 30-year fixed at 6.5% | Stays at about $1,517 for the life of the loan |
| A 7/1 ARM at 5.9% | Lower for seven years, then follows the market |
| Refinanced later | A new fixed payment, at whatever the rate is then |
Fixed means the rate at closing is the rate forever, which is why most buyers choose it.
Part 3 of 4
What people get wrong
That a fixed-rate payment never changes at all. The principal and interest do not; the taxes and insurance collected with it can.
Part 4 of 4 · where to read next
Where it appears in the sale
What a definition is, and what it isn't
Keighbor is a software company, not a law firm, brokerage, or tax adviser. This is general information, not legal, tax, financial, or real estate advice about your sale. Your situation may differ. Before acting on a contract, disclosure, title, tax, or pricing question, ask an appropriately licensed professional in your state.
Written and researched by Keighbor Research · drawn from the reference glossary · how we research and check what we publish
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