Which type of loan features a monthly payment that does not change over time?

A fixed-rate mortgage is characterized by a consistent monthly payment that remains unchanged throughout the duration of the loan term. This stability is one of the key features that borrowers often seek, as it allows for easier budgeting and financial planning. The interest rate on a fixed-rate mortgage is set at the inception of the loan and does not fluctuate over time, ensuring that the borrower knows exactly how much they will owe each month for principal and interest.

In contrast, adjustable-rate mortgages (ARMs) have rates that can change at specified intervals, resulting in fluctuating monthly payments. Interest-only loans initially require only the interest portion of the payment, which can lead to higher payments later when the principal must also be repaid. Balloon loans entail small payments for a period, followed by a large final payment at maturity, leading to variable monthly cash flow. Each of these alternatives lacks the predictability of a fixed-rate mortgage, making it the optimal choice for borrowers seeking stability in their monthly financial obligations.