What Is a Fixed-Rate Mortgage? (2027 Guide)

A fixed-rate mortgage keeps the same interest rate for the whole loan term, so your principal-and-interest payment never changes. As of October 29, 2026, the average 30-year fixed rate was 7.24% and the 15-year was 6.60%, according to Freddie Mac's Primary Mortgage Market Survey. This 2027 guide shows what that costs on a typical Hampton Roads home, how the terms compare, and how an adjustable-rate mortgage (ARM) changes after its fixed period.

Feature	30-yr Fixed	5-year ARM (5/1 or 5/6)	7-year ARM (7/1 or 7/6)
Initial rate	Usually higher	Often lower	Often lower
Rate certainty	Whole loan term	First 5 years	First 7 years
Best for	Long-term hold	Selling within 5 years	Selling within 7 years
Risk	P&I can't rise	Can rise after year 5, within caps	Can rise after year 7, within caps
Refinance flexibility	Optional, if rates fall	Possible if you qualify then	Possible if you qualify then

How a fixed-rate mortgage works

You repay the principal over the term at one rate set at closing, on an amortization schedule: early payments are mostly interest. On a $333,000 loan at 7.24%, the first $2,269 payment is about $2,009 interest and $260 principal, and after five years the balance is still about $314,000. Escrow for taxes and insurance (including any required flood policy) is added on top.

What a fixed rate costs on a Hampton Roads home

The ten-city Hampton Roads median sold price was $370,000 (VaHome analysis of REIN MLS data, September 2026; see the Hampton Roads market report). With 10% down, that is a $333,000 loan:

• 30-year fixed at 7.24%: about $2,269 a month, $484,000 total interest.
• 15-year fixed at 6.60%: about $2,919 a month, $192,000 total interest.
• Rate sensitivity: each 1-point rate change moves the 30-year payment about $220 to $230 ($2,048 at 6.24%, $2,499 at 8.24%).

Principal and interest only; taxes, insurance and any PMI are extra. More: how a 1% rate increase affects buying power.

30-year vs. 20-year vs. 15-year

• 30-year fixed: lowest required payment, most interest. Paying the 15-year amount on it retires the loan in about 16 years (see chart) while keeping the lower payment as a fallback.
• 20-year fixed: a middle ground. Freddie Mac doesn't survey 20-year rates, so get lender quotes.
• 15-year fixed: highest payment, lowest rate, averaging about 0.65 points below the 30-year in 2026 (through October 29).

Fixed-rate vs. ARM

An ARM holds an introductory rate, then adjusts on a schedule: yearly on a 5/1, every six months on a 5/6. Per the CFPB, the new rate is an index plus the lender's margin, subject to caps. The margin is set at closing and varies by lender, so shop it. Caps come in three kinds:

• Initial adjustment cap: commonly 2 or 5 points on the first change.
• Subsequent adjustment cap: usually 1 or 2 points per later change.
• Lifetime cap: usually 5 points over the starting rate; some allow more.

Regulation Z requires notice 210 to 240 days before the first payment at a new rate, and 60 to 120 days before later changes. Freddie Mac stopped surveying ARM rates in November 2022 (last 5/1 reading: 6.06% vs. 7.08% for the 30-year). Ask each lender for the ARM's highest possible payment.

Fixed-rate wins when:

• You'll keep the loan past an ARM's fixed period
• You want a payment that cannot rise
• The ARM discount is small next to its reset risk

An ARM can win when:

• You'll almost surely sell or pay off before the first reset
• The initial rate is materially lower
• You could afford the payment at the caps

When fixed-rate makes sense

For most Hampton Roads buyers, including first-time buyers using FHA, VA or a 3%-down conventional loan, the 30-year fixed is the sensible default: the payment stays put, and you can refinance if rates drop and you qualify. For context, 7.24% is just below the survey's average since April 1971 (about 7.68%) and far above the 2.65% record low of January 7, 2021.

If PCS orders could move you in a few years, an ARM can look tempting, but if you might keep the home as a rental, the loan outlives your stay. And VA-backed loans can be assumed, so a future buyer could take over your fixed rate. See our military relocation resources and the VA loan guide for Hampton Roads.

Frequently Asked Questions

What is a fixed-rate mortgage?

A mortgage where the interest rate stays the same for the entire loan term, so your principal-and-interest payment never changes.

How long does a fixed-rate mortgage last?

30 years is most common; 10, 15, 20 and 25-year terms exist. Longer terms mean lower payments and more total interest.

What's the difference between fixed-rate and ARM?

A fixed rate never changes; an ARM resets after its introductory period, within caps.

Is a 15-year mortgage better than a 30-year?

It costs far less interest (about $192,000 vs. $484,000 on $333,000 at October 29, 2026 rates) but about $650 more a month. Better only if that payment fits with room to spare.

Can I refinance my fixed-rate mortgage?

Yes, if you qualify: to a lower rate, a new term, or from FHA to conventional. FHA annual mortgage insurance lasts 11 years with 10%+ down and the life of the loan otherwise, so refinancing to conventional with enough equity is the usual way to drop it. Expect closing costs; see 7 types of refinance loans.

Are fixed-rate mortgages more expensive than ARMs?

A 30-year fixed usually starts higher than an ARM's introductory rate. After the fixed period, an ARM can cost more if its index rises.

Can I pay off a fixed-rate mortgage early?

Usually. VA loans have no early-payoff penalty, and the CFPB notes that where penalties exist they typically hit only full payoff in the first few years, not small extra principal payments. Check your note.

What credit score do I need for a fixed-rate mortgage?

The loan program sets it. FHA: 580 for maximum financing, 500 to 579 with 10% down (HUD, October 2026). VA sets no minimum; lenders do. Fannie Mae dropped its 620 floor for Desktop Underwriter loans on November 16, 2025, though lenders may keep their own. Ask one of our local lenders about your file.

Sources & further reading

• Freddie Mac: Primary Mortgage Market Survey
• CFPB: Mortgage loan options
• CFPB: Fixed-rate vs. adjustable-rate mortgages
• CFPB: ARM rate caps
• CFPB: Regulation Z 1026.20, ARM adjustment notices
• CFPB: What is a prepayment penalty?
• VA: Purchase loan
• HUD: Mortgagee Letter 2026-11 (FHA credit score thresholds)
• VaHome: Hampton Roads housing market report

Rates as of October 29, 2026; market figures for September 2026. Freddie Mac updates its survey every Thursday. Always confirm current details with the relevant agency, lender, or licensed professional before relying on any specific figure or rule.