In this article
- 15-Year Mortgage Rates as of July 2022:
- 15-Year Mortgage Rate Types
- 15-Year Refinance Rates
- An Example Of 15-Year Refinance Rates
- 15-Year Home Purchase Loans
- Building Home Equity
- How Mortgage Interest Rates are Determined
- Is it Hard to Qualify for a Fifteen-Year Fixed-Rate Mortgage?
- 15-Year Mortgage Rates FAQ
According to our daily rate survey, 15-year mortgage rates today start at 4.25 percent (4.281 percent APR) for a conventional mortgage.
While the rates for a 15-year mortgage are generally much lower than those of a 30-year fixed rate mortgage, the spread does change quite often. On top of that, rates will typically vary from lender to lender based on how good a borrower’s credit score is.
If you’d like to see which lenders offer you the best rates based on your down payment, credit score, and other factors, here are a few options for you to consider:
15-Year Mortgage Rates as of July 2022:
|15 Year Fixed – Conventional||15 Year Fixed – FHA||15 Year Fixed – VA|
These rates are provided by one of our partner networks and don’t necessarily reflect the current market. As such, the rates you receive might be different. For a personalized rate quote, use our fast and easy rate and closing cost tool. Its FREE and takes less than 30 seconds to see results.
15-Year Mortgage Rate Types
If you are looking to save on interest and can afford to make higher monthly payments, here’s a look at some of the options you could use to take advantage of the current 15-year mortgage rates:
VA 15-Year Rates: This option generally offers the lowest interest rates. However, for you to qualify, you must be eligible to receive a VA loan—you must be a member of select associated groups, a veteran, or still serving in the military.
15-Year Refinance: Refinancing your thirty-year mortgage to a fifteen-year mortgage is one of the best ways to lower your interest rate and make it a lot easier for you to pay off your mortgage sooner.
Conventional 15-Year Rates: With this option, you get to enjoy much lower rates than a conventional 30-year loan and much lower interest payments. You can avoid PMI (private mortgage insurance) if you have 20% equity when refinancing or can make a 20% down payment.
15-Year Jumbo Loan Rates: While such loans are generally very competitive, you still should consider shopping around for a better deal since they aren’t backed by any government agency and interest rates may considerably vary from one mortgagee to the next.
FHA 15-Year Rates: While FHA 15-year rates are low, these loans typically attract mortgage insurance premiums that may last as long as the loan’s life. This extra cost could make your annual percentage rate (APR) much higher than that of other types of loans.
Here’s a Look at How Fifteen-Year Fixed Mortgage Rates Compare:
|30yr Fixed Conv.||15yr Fixed Conv.||20yr Fixed Conv.||10yr Fixed Conv.||30yr Fixed FHA||15yr Fixed FHA||30yr Fixed VA||15yr Fixed VA|
These rates are provided by one of our partner networks and don’t necessarily reflect the current market. As such, the rates you receive might be different. For a personalized rate quote, take 30 seconds and complete a FREE rate and closing cost quote.
15-Year Refinance Rates
Let’s say you bought your first house 15 years ago at age 30.
If you opt to refinance your mortgage to a new 30-year mortgage now, you will still be making payments when you are 75 — meaning you will be paying interest for much longer.
A better option would be to refinance your existing thirty-year mortgage to a fifteen-year home loan. Doing so could help make it easier for you to pay off your home within a scheduled time or a lot sooner and save some cash on interest payments.
And while the payments you make each month are higher, the good thing is that you will be mortgage-free by the time you hit 60—this allows you to enjoy the best years of your life as a retiree without having to worry about making mortgage payments.
An Example Of 15-Year Refinance Rates
Using The Mortgage Reports’ refinance calculator, we show you how savings from a 15-year refinance option compare to a 30-year one. You can use this example to work out your savings using your figures.
So, let’s say you bought your home two years ago and have a mortgage balance of $250,000. And let’s say your monthly mortgage payment for interest and principal is $1,200 and your current mortgage rate is 4%. Let’s also assume that by the time you are refinancing, the rates for 15-year mortgages stand at 2.25%, while those of 30-year fixed-rate mortgages average around 2.75%.
Here’s a look at how your refinance options will compare in such an instance:
|New Loan Term||30 years||15 years|
|New Interest Rate||2.75%||2.25%|
|New Monthly Payment||$1,040||$1,660|
|Total Interest on New Loan||$119,300||$45,500|
Please note that the monthly payments and interest rates shown here are for sample purposes only. The payments shown here only include interest and loan principal; property taxes and homeowners’ insurance aren’t included.
In the example above, choosing a fifteen-year refinance over a thirty-year refinance has several benefits.
For one, you’ll reduce the number of years you would have spent paying off your home from the 32 years you’d have to take to refinance a new 30-year mortgage to just 17 years. But the biggest advantage comes from interest savings. With a fifteen-year refinance, you’d only pay $45,500 in interest over your loan’s new term. That is less than half the interest you’d pay on a new thirty-year loan—this means you’d save over $73,000.
However, as you can already tell, there is a disadvantage. Instead of lowering the amount you pay every month (as a 30-year mortgage refinance plan would), the new 15-year refinance plan increases the amount you pay by $460/month. The difference is quite huge and is one that most homeowners wouldn’t be able or willing to handle. This is the main difference between 30-year and 15-year mortgage rates.
15-Year Home Purchase Loans
Now let’s say, considering the example above, that you are halfway through paying your thirty-year mortgage but want to move houses instead of refinancing. You can still make considerable savings by going for the 15-year mortgage option. You could end up saving more since purchase rates are, in some instances, much lower than mortgage refinance rates.
Building Home Equity
Another advantage of buying a home using a 15-year mortgage is that you will build home equity a lot quicker, thanks to something known as an “amortization schedule.”
Amortization schedules outline how long it takes someone to pay off their mortgage interest and principal.
During the initial stages of your loan term, a large portion of the payments you make goes towards interest. As your loan term comes to an end, you start paying more towards your loan balance.
With the 30-year option, you will spend more time paying off interest before you start making any progress in paying off your loan’s principal. With shorter-term loans, you start paying down your loan balance and get to build equity much faster.
Again, you can run your figures, but this time using the purchase mortgage calculator provided by The Mortgage Reports. For comparison purposes, select both the 15-year and 30-year loan terms in turn.
How Mortgage Interest Rates are Determined
We can only show you the current 15-year rates as averages. It is worth noting that what you’ll end up paying is going to be determined by various factors.
The good thing is that you can sway some of the aspects that determine your interest rate to get the best deal possible. These include:
- Your employment history
- Your debt-to-income ratio (DTI)
- How much you put down as a down payment
- Your credit report and credit score
- The lender you choose
It’s worth noting that mortgage interest rates fluctuate with the general interest rate market. While demand and supply for MBS, or mortgage-backed securities, play a crucial role in determining your rate, there is very little you can do about any of it. As such, if you want to save any money, your focus should be on the aspects you can control, such as your credit score and the loan-to-value ratio.
Is it Hard to Qualify for a Fifteen-Year Fixed-Rate Mortgage?
Well, it is no harder to qualify for a fifteen-year mortgage than a thirty-year one. While the guidelines are typically determined by loan type (VA, FHA, or conventional), the requirements for a 30-year and 15-year loan within each program are generally similar.
For example, to qualify for a 15-year FHA loan, you’ll most likely need to have a credit score of at least 580, a debt-to-income ratio of below 50 percent, and a down payment of 3.5 percent, as is the case with a 30-year FHA mortgage.
In reality, however, it is much more difficult to qualify for a fifteen-year mortgage because of how high the monthly payments are. Bigger mortgage payments mean you will have to spend more of your monthly income to pay off your home loan—something that’ll affect your debt-to-income ratio.
For most borrowers, paying off existing debts and a 15-year mortgage is something that’ll take up more than 43 to 50 percent of their monthly income; and that is more than the DTI range a majority of lenders allow.
If you are set on taking up a 15-year mortgage plan but have a tight monthly budget, settling or paying down some of your existing debts before applying for the loan could help increase your chances of qualification.
15-Year Mortgage Rates FAQ
What exactly are 15-year mortgage rates?
As is the case with all interest rates, fifteen-year mortgage rates fluctuate almost every day. Their movement is quite similar to that of 30-year rates, with the only difference being they are much lower – and that’s mainly because they have fallen considerably over the last ten years or so.
Are 15-year mortgage rates always lower than 30-year rates?
It’d be a weird day if 15-year fixed mortgage rates went higher than those of a 30-year mortgage. While this is next to impossible, the difference between the two sometimes widens or narrows. For example, fifteen-year fixed rates were nearly 1% lower than thirty-year rates for a brief period in 2013.15-year fixed mortgages only become attractive if they offer significantly lower rates than 30-year mortgages.
How much do 15-year mortgages cost?
15-year fixed-rate loan’s monthly payments are generally much higher than those of a 30-year mortgage. For example, a $250K loan would cost you about $1,660/month in interest and principal at today’s rates versus $1,040 for a thirty-year fixed rate mortgage. However, over the term of the loan, you will see serious savings on interest.
Another thing you’ll need to consider is closing costs, which can total up to 5 percent of your loan amount. This is generally not any lower on 15-year loans than on 30-year ones. If you choose to go for discount points in a bid to significantly lower your interest rate, then please note that doing so could considerably increase your closing costs.
For help comparing loan options and finding the total savings and costs for a 15-year mortgage versus a 30-year one, speak to a professional loan officer for assistance.
Are 15-year mortgages a good idea?
Well, if you can afford to make the monthly payments on your 15-year mortgage comfortably, then go for it. With a shorter-term loan, you stand to save thousands of dollars in the long run.
However, no mortgage option is a good idea if you can’t comfortably make payments every month. The important thing to remember here is that the mortgage is secured by your home; therefore, failing to make payments may result in you losing your home through foreclosure.
For most, the lower cost of a 30-year fixed rate mortgage makes it a more affordable option and offers some security, especially when things get tough. Furthermore, you have the option to pay extra cash each month, turning your thirty-year term into a fifteen-year one.
Is it more difficult to qualify for a 15-year home loan?
Qualifying for a 15-year mortgage is a bit more difficult since most lenders will first determine if you have the money to pay the higher monthly costs on your current budget. Apart from that, it isn’t too different – the minimum down payment and credit score requirements are typically similar for both 30-year and 15-year fixed mortgages.
Which lender has the best 15-year fixed-mortgage rates?
There isn’t a lender on the market that offers the ‘best’ mortgage rates for a 15-year home loan. A mortgage lender can be less or more competitive depending on your down payment, credit score, and other factors.
Furthermore, mortgage rates change almost daily based on a lender’s current workload and the market. When the market is busy, lenders tend to raise rates as a way to deter business.
Due to this, you should get several mortgage rate quotes from several lenders and compare them for improved chances of finding a great deal.
Which is better: getting a 15-year mortgage or paying extra on a 30-year mortgage?
The 15-year refinance option could potentially net you considerably lower rates, saving you thousands in interest. Alternatively, you could effectively pay down your thirty-year mortgage by increasing your payments or putting in a big lump sum.
The benefit of using this approach is that you are not required to pay any extra cash on your loan and you can always return to making lower payments whenever money is tight. However, with the 15-year home loan, you are required to make the higher payments or risk having your loan become delinquent.
If you are having trouble choosing between the two, consider getting in touch with a mortgage expert for more on how much you could end up saving with each option and which, of the two, makes more sense as per your current finances.
How do I get the best fifteen-year interest rate?
A shockingly large number of borrowers ask only one broker or lender for a rate quote when refinancing or buying a home, not knowing that they risk losing a lot of money. If you are looking to get the best deal possible for a 15-year mortgage, make sure you request several quotes from different lenders—about three at a minimum—and compare them to see who offers a deal that best suits your needs.