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A 15-year mortgage allows borrowers to finish paying off their homes in half the time and at a lower overall cost than a 30-year loan. The catch? You’ll have a higher monthly mortgage payment.

The higher payments means a 15-year mortgage won't be affordable for everyone, but it can be the right move for some.

What is a 15-year fixed-rate mortgage?

With a 15-year fixed-rate mortgage your interest rate will remain the same throughout the loan term.

One of the main benefits of a 15-year mortgage is that you'll likely qualify for a lower rate than you would with the more popular 30-year fixed-rate mortgage. A lower rate, combined with the shorter payback time, can save you thousands of dollars in overall borrowing costs.

The Achilles heel of 15-year mortgages is that your monthly payments will be higher than on similarly sized 30-year loan. But, if you can afford the monthly expense, you could be debt-free quicker and pay less interest over time.

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The pros & cons of 15-year mortgage

15-year vs. 30-year mortgage loans

30-year mortgages

A 30-year fixed-rate mortgage is the most popular type of home loan in America, because the long repayment period results in significantly lower monthly payments. Having a lower mortgage payment could help you save for other goals, such as home renovations or retirement. However, with a 30-year fixed mortgage, you’ll pay a higher interest rate compared to a mortgage with a shorter term.

For instance, with a $200,000 30-year mortgage with a fixed rate of 3.5% (roughly the average 30-year rate in early 2022) your monthly payment would be $898 and you would pay $123,311 in interest by the end of your loan term.

15-year mortgages

A 15-year fixed-rate mortgage works a lot like a 30-year fixed. However, since you’re paying off the loan quicker, you’ll build home equity faster and likely qualify for a lower rate. The drawback of a 15-year mortgage is that payments will be much higher, and you may have less wiggle room to save and make other investments.

If you had a $200,000 15-year mortgage with a fixed rate of 3% (roughly the average 15-year rate in early 2022) , you'd pay $1,381 per month and a total of $48,609 in interest over the life of your loan.

That’s $74,702 less total interest than on a 30-year, but $483 more per month.

15-year mortgages vs. 5/1 ARMs

Like 15-year mortgages, 5/1 ARMs (adjustable rate mortgages) initially feature lower interest rates than popular 30-year loans. However, 15-year and 5/1 ARM work very differently. With a 5/1 ARM, your rate will be fixed for the first five years of the 30-year loan term but reset annually after that.

The initial interest rate can increase considerably after the initial fixed-rate period. So if you’re looking for predictable monthly payments, a 15-year fixed-rate mortgage would be the obvious choice over a 5/1 ARM. But it’s not a total gambit. There are rules that restrict how much your rate can increase and fall throughout the life of your 5/1 ARM.

Finally, a 5/1 ARM could be worth considering if you're planning to live in your home for a short period. For example, if you purchase a fixer-upper the advantage of a 5/1 ARM’s lower payments could give you leeway to invest money on renovations. If you plan it right, you could move right before your payments shift to the adjustable rate.

15-year mortgage FAQs

When is a 15-year mortgage worth it?

If you want to own your home outright as soon as possible or save on interest payments, a 15-year mortgage may be appealing. However, since the repayment term is shorter, your required monthly payments will be significantly larger than those on a 30-year loan of the same size. That means you need to be sure you can comfortably afford the higher payments. A common rule of thumb says you should spend no more than 30% of your income on housing costs. If your monthly mortgage payments (plus property taxes, homeowners insurance, home maintenance costs, etc) falls below that threshold with a 15-year loan, it may make sense for you.

How can I qualify for a 15-year mortgage?

To qualify for most conventional loans (i.e. loans that are not government backed), you'll need a minimum credit score of 620, a minimum down payment of 3% and a debt-to-income ratio below roughly 36%. Your DTI ratio consists of all your monthly debt payments — including your new mortgage — divided by your gross monthly income. This number, which lenders use to measure a borrower's ability to afford the monthly expense of a mortgage, is the trickiest metric for a 15-year borrower since the monthly payments are higher. To qualify for a 15-year mortgage, your DTI cannot exceed 50%. Generally, a good debt-to-income ratio is under 36%. Lowering a high DTI ratio should be a priority if you're considering a 15-year mortgage. You can do so by paying off existing debts like student loans, car loans or credit card debt or by increasing your income.

Can I switch from a 30-year to a 15-year mortgage?

You can switch from a 30-year to a 15-year mortgage through a mortgage refinance. When you refinance, you're essentially replacing your existing mortgage with a new one, complete with a new term (length) and mortgage rate. This can make sense if you have been in your home for some time and can now afford a higher payment. Keep in mind that you'll still need to pay closing costs — which average 3% to 6% of the loan amount — and that refinancing will restart the clock on your loan. That means if you refinance into a 15-year loan after paying your 30-year mortgage for 10 years, your total payback time will be 25-years.

Are there other ways to pay down your mortgage faster?

If you don't want to commit to the higher monthly costs of a 15-year mortgage, you can reduce the amount of time you need to pay a 30-year mortgage by paying more than required. You can do this by paying extra each month or through occasional lump sum payments. A popular strategy is making payments biweekly rather than monthly, which results in one extra payment each year. Any extra payment will also lower your total interest costs, since they should go toward reducing your loan principal. Most lenders will allow you to make extra payments without a prepayment penalty, but be sure to ask. Also confirm that your additional payments are being credited toward your principal loan amount, not future interest payments.

Mortgage rate history & trends

What is a good 15-year mortgage interest rate?

Your interest rate will be determined by the economy, as well as a number of individual factors like your credit score and down payment amount. So, what qualifies as a good mortgage interest rate will vary from one borrower to the next.

For reference, over the decades, average mortgage rates have fluctuated. In the 1990s, the average 15-year mortgage rate for the most-qualified borrowers reached nearly 9% — currently, they’re near 3%.

To get the best available rate, you can work on improving your credit score, gathering funds for a down payment or lowering your debt-to-income ratio (DTI). Before settling on a mortgage rate, you should always shop around and compare rates.

Shop and compare mortgage rates

Figuring out how much house you can afford is the first step toward homeownership. To compare rates and get a better idea of what your budget is, experts recommend you apply for a prequalification or preapproval through multiple lenders. Not taking the first rate offered has been shown to save borrowers thousands over the life of a loan.

If you’re still testing the waters, a prequalification letter can give you an estimate of what a lender would loan you based on self-reported information regarding your income, credit and DTI. But should you be ready to take the plunge, obtaining a mortgage preapproval letter can give you a realistic idea of your loan options, interest rates and how much house you can afford.

A preapproval letter states the loan amount that you’re eligible for based on a thorough examination of your finances. To obtain a mortgage preapproval, you’ll have to provide proof of income, credit history, debts, assets and rental history.

That said, getting pre-approved involves a hard credit pull which may lower your credit score by a few points — but there are ways you can reduce the impact on your credit. Most credit models weigh multiple hard inquiries for mortgages as one inquiry if they are made within 14 to 45 days.

Mortgage pre-approval letters are generally valid for 60 to 90 days and most are completed within 10 business days. Pre-qualifications, on the other hand, are ready within minutes.

What Makes Our Data Different

Money’s daily mortgage rates show the average rate offered by over 8,000 lenders across the United States the most recent business day rates are available for. Our rates reflect what a typical borrower with a 700 credit score might expect to pay for a home loan right now. These rates were offered to people putting 20% down and include discount points.

Disclaimer: We try to keep our information current and accurate. However, interest rates are subject to market fluctuations and vary based on your qualifications. Calculator results assume a good credit score and factor-in regional averages; your actual interest rate may differ. Calculator results are for educational and informational purposes only and are not guaranteed. You should consult a licensed financial professional before making any personal financial decisions.