Fixed-Rate Second Mortgages

A fixed second mortgage is a loan secured by your home that sits in second position behind your existing first mortgage. You’re approved for a set amount based on your available equity, you receive those funds as a single lump sum at closing, and you repay them in equal monthly installments over a fixed term.

The word “second” simply describes the lien position, not the quality of the loan. Your first mortgage stays untouched — same rate, same term, same servicer. The second mortgage is added alongside it as its own separate loan with its own payment. Because it’s secured by real estate, the rate is typically well below what you’d pay on credit cards, personal loans, or unsecured lines of credit.

A fixed second is the right fit when you know the exact amount you need and you want certainty in the payment. That commonly includes homeowners consolidating high-interest credit card or personal loan balances into one fixed payment, families funding a full renovation or addition with a contractor bid already in hand, borrowers covering tuition or a major medical expense, and anyone who simply prefers a defined payoff date over an open-ended line.

It’s also a strong option if you locked in a low rate on your first mortgage. A cash-out refinance would replace that rate with today’s on your entire balance; a fixed second leaves it completely alone and borrows only against the equity above it.

Fixed seconds can also be used at the time of purchase. Pairing a first mortgage with a second — commonly structured as 80/10/10 — can help buyers avoid mortgage insurance or stay within conforming loan limits on a higher-priced home.

Fixed second vs. HELOC: both draw on the same equity. Choose a fixed second when you want a lump sum, a fixed rate, and a set payoff date. Choose a HELOC when you’d rather have a revolving line you can draw from over time at a variable rate. If you’re not sure which fits, we’ll walk you through both.

• Receive your funds as a single lump sum at closing — no draw period, no waiting.
• Fixed interest rate for the life of the loan — your rate doesn’t move with the market.
• Fixed monthly principal-and-interest payment — the same amount every month, start to finish.
• Terms commonly range from 5 to 30 years, with 10-, 15-, and 20-year options among the most popular.
• Your first mortgage stays exactly as it is — there’s no need to give up the rate and term you already have.
• Borrow against equity while keeping cash reserves intact — no need to liquidate savings or investments.
• No prepayment penalties with most programs — pay the loan down or off early at any time.

• Sufficient equity in your home — most programs allow a combined loan-to-value of 80% to 90% after the second is added, with some programs going higher.
• Credit score — generally 620 and above, with the strongest pricing reserved for higher scores.
• Verifiable income and manageable debt-to-income ratio — most lenders look for a DTI under roughly 43% to 50%, including the new second mortgage payment.
• A current valuation of the property — this may be a full appraisal or, in some cases, an automated valuation.
• Primary residences, second homes, and investment properties may all be eligible — loan limits and terms vary by occupancy type.