Definition
A home loan whose interest rate is locked for the entire term, so the principal-and-interest payment never changes. The 30-year fixed is the standard American mortgage; 15-year and 20-year versions carry higher payments but far less total interest.
Why it matters
Predictability is the whole point: a payment that stays flat for decades while wages and rents rise is a built-in hedge against inflation. The trade-off is a rate usually higher than an adjustable-rate loan's opening rate, and the need to refinance to capture lower rates later.
Example
On a $350,000 loan at 6.5%, a 30-year fixed costs about $2,212 a month and roughly $446,000 of total interest; a 15-year fixed at 6% costs about $2,953 a month but only about $182,000 of interest. On either loan the payment is identical in the first month and the last.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.