What is a fixed-rate mortgage?

A fixed-rate mortgage charges a set rate of interest that does not change throughout the life of the loan. Although the amount of principal and interest paid each month varies from payment to payment (due to the different number of days in a given calendar month) the total payment remains the same.

Fixed-rate mortgages are easy to understand, and loan terms vary little from lender to lender. While they protect the consumer from sudden and potentially significant increases in monthly mortgage payments if interest rates rise, qualifying for a loan when interest rates are high may make payments less affordable.