What is a Fixed-Rate Mortgage?

A fixed-rate mortgage has an interest rate that remains the same for the life of the loan. In other words, your total monthly payment of principal and interest will remain the same over time. A fixed-rate mortgage is the most popular type of financing because it offers predictability and stability for your budget.

Fixed-rate loans can either be conventional loans or loans guaranteed by the Federal Housing Authority (FHA) or the Department of Veterans Affairs (VA).
Fixed-rate mortgages are characterized by amount of loan, interest rate, compounding frequency, and duration. With these values, the monthly repayments can be calculated.

Each month’s payment is equal to the interest rate times the principal, plus a small percentage of the principal itself. Since a bit of the principal is paid off each month, that makes the interest payment on the remaining principal a little less too. As a result, more of your monthly payment goes toward the principal each month. Therefore, at the beginning of the loan, most of the payment goes towards interest while most of it goes towards principal at the end of the loan.