Key features are: 

• The interest rate remains "fixed" for the life of the loan

• Payments remain level for the entire duration of the loan and are structured to repay the loan at the end of the loan term (fully amortize.)    

• The most common fixed rate loans are 15 and 30 year mortgages. 

Initially, a larger percentage of the monthly payment is used for paying interest. As the loan is paid down, more of the monthly payment is applied to principal.  This is termed "amortization" of the loan.  Fifteen and thirty year loans are the most common. A typical 30 year fixed rate mortgage will take about 22.5 years of level payments to pay 50% of the original loan amount. By making extra principal payments each month, you can shorten considerably the loan term if payment is made early in the amortization period.

Most fixed rate mortgages are sold in the secondary mortgage. The loans are "pooled" with other fixed rate mortgages and converted into mortgage backed securities and bonds. These mortgage backed securities then become part of the larger capital markets which also includes government securities, corporate bonds and municipal bonds. Mortgage backed securities that include 30 year fixed mortgages typically follow the yields on 10- year maturity U.S government securities.