A fixed-rate mortgage (FRM) is a mortgage loan first developed by the Federal Housing Administration (FHA) where the interest rate on the note remains the same through the term of the loan, as opposed to loans where the interest rate may adjust or “float.” Other forms of mortgage loans include interest-only mortgage, graduated-payment mortgage, variable rate (including adjustable-rate mortgages and tracker mortgages), negative amortization mortgage, and balloon payment mortgage. Please note that each of the loan types above except for a straight adjustable-rate mortgage can have a period of the loan for which a fixed rate may apply. A Balloon Payment mortgage, for example, can have a fixed rate for the term of the loan followed by the ending balloon payment. Loans for which the rate is fixed for less than the life of the loan may be called hybrid adjustable-rate mortgages.
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