Fixed-Rate Mortgages: 15 & 30-Year Terms
Your interest rate is locked for the life of your loan, so your principal and interest payments won’t change. Choose a 30-year term for lower monthly payments, or a 15-year term to pay off your home sooner and pay less interest.
- Rate fixed for life of loan
- As little as 3% down
- Minimum 620 FICO® Score
- No prepayment penalties
15-Year vs. 30-Year Fixed: Which Term Fits You?
Lower monthly payment30-Year30-Year Fixed-Rate Mortgage
Your monthly payments will be less than on a 15-year fixed loan, because your payments are spread out over a longer period.
Less interest, paid off sooner15-Year15-Year Fixed-Rate Mortgage
You’ll pay off your mortgage faster and pay less in interest over the life of the loan than with a 30-year mortgage.
| At a glance | 30-Year Fixed | 15-Year Fixed |
|---|---|---|
| Paid off in | 30 years | 15 years |
| Monthly payment | Lower: payments are spread out over a longer period | Higher: the loan is paid off faster |
| Total interest | More interest over the life of the loan | Less interest over the life of the loan |
| Interest rate | Fixed for the life of the loan | Fixed for the life of the loan; 15-year rates are generally a little lower |
| Principal & interest | Won’t change over the life of the loan. The amount for your taxes and insurance can go up and down. | |
Also available: 20-year fixed. A 20-year fixed-rate mortgage is a house loan with the same interest rate and monthly principal and interest payment for the whole loan term of 20 years. You’re not paying for as long as a standard 30-year mortgage, which saves you a lot of money in interest.
Who Are Fixed-Rate Loans Best For?
Looking for a traditional loan
If you're looking for a traditional loan, a 30-year fixed loan is a good option. You may lock in a 30-year fixed rate today.
Saving more in interest
People who want to save more in interest by paying off their loan sooner and want an interest rate that never changes over the entire life of the loan are the ones that benefit most from a 15-year fixed-rate mortgage.
How Do Fixed-Rate Mortgages Work?
30-year fixed
With a 30-year fixed-rate loan, you’ll pay off your mortgage in 30 years. Although you’ll pay more interest over the life of the loan compared to a 15-year fixed loan, your monthly payments will be lower.
15-year fixed
Simply put, you’ll pay off your mortgage in 15 years. Because you’ll pay off the loan faster than a 30-year mortgage, you’ll pay less in interest over the life of the loan.
Both terms
Because your interest rate is locked for the life of your loan, your principal and interest payments won’t change over the life of your loan. The amount for your taxes and insurance can go up and down. You may have to pay for mortgage insurance, depending on your down payment amount if you’re buying a home, or how much equity you have if you’re refinancing.
TAG · Fixed-Rate Mortgages
How Do I Qualify for a Fixed-Rate Mortgage?
To qualify for a 15-year or 30-year fixed-rate loan, you’ll need:
- A minimum 3% down payment.
- A minimum FICO® Score of 620.
- A debt-to-income ratio (DTI) of no more than 50%. Estimate your DTI by adding your monthly debt payments (such as credit card and car payments) and dividing the total by your monthly income before taxes.
- Money to cover closing costs, which are about 2% – 6% of the purchase price.
- Copies of your financial documents to show that you can afford the monthly payment (last two paychecks, last two federal income tax returns and your most current bank savings and checking account statements).
Fixed-Rate Mortgage Benefits
Your rate never changes
Your interest rate is fixed for the life of the loan, so you don’t have to worry about rates rising.
Lower payments on 30 years
Your monthly payments will be less for a 30-year fixed loan than a 15-year fixed loan, even though interest rates for a 15-year fixed loan are generally a little lower. That’s because your payments will be spread out over a longer period.
Faster payoff on 15 years
You’ll pay off your mortgage faster than with other loans.
No prepayment penalties
You can pay off your mortgage at any time without prepayment penalties.
As little as 3% down
You can buy your primary home with as little as 3% down.
Avoid mortgage insurance
You may be able to avoid mortgage insurance with a down payment of 20% or higher.
Refinance up to 97%
You can refinance your primary home for up to 97% of its value.
Predictable budgeting
For the duration of the loan, you know exactly how much you'll be paying each month. Stable rates and payments make it easier to compare loan options from different lenders.
Security and consistency
For homeowners, a fixed-rate mortgage provides security and consistency. You’re protected in the event interest rates rise.
Mortgage Insurance Requirements
You’ll have to pay private mortgage insurance (PMI) if your down payment is less than 20% on your 15-year or 30-year fixed-rate mortgage.
- This typically costs 0.5% – 1% of your loan amount per year, spread over 12 payments.
- Once you reach 20% equity in your home, you may be able to request to cancel PMI.
- PMI is often canceled automatically once you reach 22% equity.
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Tag Lending Group, LLC · NMLS #2329372 · Equal Housing Lender.
30-Year Fixed Loan Benefits
- Your monthly payments will be less for a 3–year fixed loan than a 15-year fixed loan, even though interest rates for a 15-year fixed loan are generally a little lower. That’s because your payments will be spread out over a longer period.
- You can pay off your mortgage at any time without prepayment penalties.
- You may be able to avoid mortgage insurance with a down payment of 20% or higher.
- Your interest rate is fixed for the life of the loan, so you don’t have to worry about rates rising.
- You can buy your primary home with as little as 3% down.
- You can refinance your primary home for up to 97% of its value.
Mortgage Insurance Requirements
You’ll have to pay primary mortgage insurance (PMI) if your down payment is less than 20% on your 15-year fixed-rate mortgage.
- This typically costs 0.5% – 1% of your loan amount per year, spread over 12 payments.
- Once you reach 20% equity in your home, you may be able to request to cancel PMI.
- PMI is often canceled automatically once you reach 22% equity.
