What Is a 15-Year Fixed-Rate Mortgage?

Our site has comprehensive free listings and information for a variety of financial services from mortgages to banking to insurance, but we don’t include every product in the marketplace. In addition, though we strive to make our listings as current as possible, check with the individual providers for the latest information. The cost of a 15-year mortgage depends on the loan amount and interest rate, which, in turn, depend on the home’s value, the size of your down payment, and your creditworthiness. To get an estimate of how much a 15-year mortgage would cost, enter your details into a mortgage calculator. The website you are accessing is for clients of Credit Union Investment Services, Inc. (CUIS), an Investment Adviser registered with the State of North Carolina. CUIS offers investment advisory services to North Carolina residents.

Cons of a 15-Year Fixed-Rate Loan

Once the pre-qualification form is completed, a pre-qualification letter is typically generated within one business day. If a small rate increase would mean financial stress for your household, you may be better off with the certainty of a fixed rate loan. When it comes down to it, you always have the option to make a larger payment (or extra payments) on a 30-year mortgage.

Current Mortgage Rates by State

A borrower is entitled to direct the extra payments to the principal, and if the payments are consistent, the mortgage will be paid off in 15 years. If times get tight, the borrower can always fall back to the normal, lower payments of the 30-year schedule. But a lender will have to approve you for a refinance, meaning that you’ll have to complete a lot of paperwork, pay fees and apply for a new loan all over again. The homebuyers who qualify for the lowest mortgage rates tend to have good credit scores.

Learn more about 15-year mortgages

Lenders decided they couldn’t make enough margin on a 5/1 ARM with a 30-year amortizing period to warrant the increased risk of defaults. Below is a graphic of the Treasury yield curve that demonstrates higher rates with longer durations. But notice how the yields for 2-year, 5-year, 7-year-, 10-year, 15-year are all lower than the yields for 1-month, 6-month, and 1-year Treasury bonds.

Buying a home is an amazing milestone in your life.

Christian Allred is a freelance writer whose work focuses on homeownership and real estate investing. Besides Rocket Mortgage, he’s written for brands like PropStream, CRE Daily, Propmodo, PropertyOnion, AIM Group, Vista Point Advisors, and more. State Employees’ Credit Union conducts all member business in English. All origination, servicing, collection, marketing, and informational materials are provided in English only. As a service to our members, we will attempt to assist those who have limited English proficiency where possible.

• You can see current 15-year mortgage rates in the table above.
• Through Bankrate.com’s Money Makeover series, he helped consumers plan for retirement, manage debt and develop appropriate investment allocations.
• Guidelines vary by loan type (conventional, FHA, or VA), but within each program, requirements for a 15- and 30-year loan are generally the same.
• Or the 30-year loan might let the borrower buy a bigger home or take on a larger mortgage.

Current 15-year mortgage rates compared to other loan types

At some point, you may have so much money that the debt becomes an annoyance and trying to always maximize returns is no longer necessary. Maybe that net worth level is $3 million for some or $20 million for others. Let’s say you bought your second primary residence, a forever home, at age 32.

• It would be a very weird day indeed if 15-year fixed mortgage rates were higher than 30-year fixed rates.
• Expect mortgage rates to continue fading lower in 2025 and maybe in 2026.
• Our friends at Rocket Mortgage® offer a mortgage calculator that can help you determine your monthly mortgage payment and ultimately help you understand how much home you can afford.
• If you have a lot of working years ahead of you, things to keep in mind are what kind of income increases you expect over the years and whether you have an inheritance or other windfall coming.
• Unless you plan to sell or refinance the home before the 5-year ARM’s fixed period ends, a 15-year mortgage is the lower risk option.
• The rates shown above are the current rates for the purchase of a single-family primary residence based on a 45-day lock period.
• Your loan officer can help you compare loan options and find the total cost and savings for a 15-year loan versus a 30-year loan.
• You are guaranteed to pay off your mortgage in 15 years if you keep making your payments.

Mortgage calculator

With this option, the total amount you pay over the life of the loan will usually be higher. This 15- vs. 30-year mortgage calculator can help you determine which option is right for you. If you already have a 30-year fixed-rate mortgage and are interested in refinancing to a 15-year mortgage, there are a couple key points to keep in mind.

Why Should I Get a 15-Year Fixed-Rate Mortgage Instead of a 30-Year?

My husband and I are debt free (paid off the house early a couple of years ago). Now, we are building our future retirement home on land we have owned for several years. The plan was to originally stay in our paid off home but soon realized that one story living and a more energy efficient home was better for us. Our current home is over 100 years old, renovated 25 years ago but now needs many updates.

Should You Only Buy a House If You Can Afford a 15-Year Fixed Mortgage Payment?

Of course, mortgage interest rates also move up and down on a broader scale with the overall interest rate market. Supply and demand for ‘mortgage-backed securities’ (MBS) will have a big impact on your rate. 15-year mortgages come with their fair share of benefits, but there are many reasons why this loan is not the default choice for many homebuyers. Want to see how much you could save in interest by choosing a 15-year fixed-rate loan? An adjustable-rate mortgage might be beneficial if you can get a lower rate and plan to sell or refinance before the rate adjusts. Lenders take your finances into consideration when determining an interest rate.

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Even in good times, you can get pretty house poor making massive mortgage payments each month if they’re barely affordable. After five years of on-time mortgage payments, our hypothetical $300,000 mortgage balance is only paid down to around $282,000 if it’s a 30-year loan. Let’s look at an example between a 15-year and 30-year payment. As noted, the mortgage rate is typically discounted on the shorter-term loan.

• While starting fresh with a new long-term loan isn’t the right tactic for everyone, it is an option, especially if you need to trim monthly expenses.
• Again, you’re able to keep more of your money with this particular loan program.
• If you’re only a few years away from paying off your mortgage, refinancing might not make much sense.
• Program excludes Jumbo, refinance, third-party and in-process loans.
• By refinancing your 15-year mortgage loan, you’ll also be extending your repayment period by another 180 months.

I’d highly recommend any readers seize this opportunity now if they have the cash flow to cover the payment. The interest rate on a 15-year is so low it’s practically free, or potentially negative in inflation-adjusted terms. Rentals I think make more sense to stick with a 30 year because the interest expense is a good tax and you can improve your cash flow to buy more rentals and lower DTI calc as well.

This can be advantageous to the lender as it can recoup the loan in half the time as a typical mortgage. Additionally, you’ll typically build equity at a much faster pace with a 15-year mortgage than with a longer term loan. However, because the monthly payment on a 15-year mortgage can be much higher than a 30-year loan, you may not qualify for as much mortgage as you’d hoped. You can estimate the purchase price of a house you may be able to afford using our home affordability calculator.

For example, if you earn $5,500 a month and have $500 in existing debt payments, your monthly mortgage payment should not exceed $1,480. This particular mortgage type has a fixed interest rate at the time of closing. The monthly Principal and interest payment is fixed, which helps you set a firm budget.

Year Fixed Mortgage Rates

Paying off a 15 yr mortgage rate could put all your money in home equity. Though it’s possible to borrow against that investment with a home equity loan or line of credit, you’ll have to pay interest on what you borrow. And it’s easier to access money in a retirement account than it is to extract equity from your home. You also might hear that 15-year fixed-rate mortgages are „fully amortizing“ loans.

Should you get a 15-year mortgage?

Low 15-year mortgage rates – averaging 3.28% to 3.44% in January 2020 – save money, and buyers interested in paying down principal quickly often can do it without breaking their bank accounts. Monthly payments for a 15-year mortgage are a lot higher than 30-year mortgages, and if interest rates were higher, the monthly payment on the shorter term could be painful. But historically low interest rates have made 15-year mortgages increasingly popular.

Historical 15-Year Fixed Mortgage Rates

15-year mortgage rates are usually lower than 30-year fixed rates, but the spread can change daily. And the cheapest lender will vary from one borrower to the next. Speak with a qualified lending professional about whether it makes financial sense for you to refinance to a 15 year fixed term mortgage.

Big Cities with the Healthiest Housing Markets

Out of all the mortgages out there, a 15-year mortgage will likely save you the most amount of interest expense. 15-year mortgage rates are almost always lower than 30-year fixed mortgage rates. However, the absolute payment is usually larger given the shorter amortization period (15 vs. 30 years). Many borrowers assume that a 30-year loan is their only option. They don’t think much about whether they could afford a higher monthly payment and, in turn, own their home faster. We suggest working with a dedicated lender who will help you crunch the numbers and determine if a 15-year mortgage could be a possibility.