A bond in which interest and principal payments are made by home owners. Typically, it is issued by a corporate entity and secured by a mortgage lien against some property of the issuer. Mortgage bonds usually pay interest in either monthly, quarterly, or semiannual periods.

Generally, mortgage bonds are not only backed by real estate, but can also may be backed by physical equipment that are highly marketable. If an bond issuer ends up in default, secured bondholders are paid off first, before unsecured bondholders.