Loan Types

Fixed-Rate Mortgage

A fixed-rate mortgage keeps the same interest rate for the entire loan term, so your principal and interest payment never changes. Your taxes and insurance can still move, but the loan part stays put. It's the most popular choice because it's predictable: the payment you start with is the payment you'll have years from now.

On your Loan Estimate, the Product line tells you the rate type, and Fixed Rate means exactly what it says. The rate is set at closing and stays there whether the market rises or falls. That stability is the whole appeal: you can plan your budget for years without wondering what the payment will be.

The tradeoff is that you don’t automatically benefit if rates drop later, though you can refinance if it makes sense. For most buyers who plan to stay put for a while, the certainty of a fixed payment is worth a lot.

Related terms

Adjustable-Rate Mortgage (ARM)

An adjustable-rate mortgage, or ARM, starts with a fixed rate for a set number of years, then adjusts up or down on a schedule based on the market. A 7/6 ARM, for example, is fixed for seven years, then can change every six months. The early rate is often lower, but the payment can rise later.

Loan Term

Your loan term is how long you have to pay back the mortgage, written in years. Thirty years and fifteen years are the most common. A longer term means a lower monthly payment but more interest paid over time. A shorter term costs more each month but builds equity faster and saves on total interest.

Rate Lock

A rate lock is a lender's commitment to hold a quoted interest rate for a set period, often 30 to 60 days, while you finish your loan. It protects you if rates rise before closing. The trade-off is that if rates fall after you lock, you usually don't get the lower rate automatically.

Last updated: June 13, 2026

This definition is educational and isn't an offer to lend or financial advice. Rates, programs, and guidelines may change without notice. All loans are subject to credit and property approval.

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