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See what's happening with home values in more than 400 metropolitan areas with HSH's Home Value Tracker, just updated though the second quarter of 2022.

See what's happening with home values in more than 400 metropolitan areas with HSH's Home Value Tracker, just updated though the second quarter of 2022.

15-year Fixed Rate Mortgages

Week 30-year-Fixed 15-year-Fixed 5-year-ARM
09/29 6.700% 5.960% 5.300%
09/22 6.290% 5.440% 4.970%
09/15 6.020% 5.210% 4.930%
09/01 5.660% 4.980% 4.510%
08/25 5.550% 4.850% 4.360%
08/18 5.130% 4.550% 4.390%
08/11 5.220% 4.590% 4.430%
08/04 4.990% 4.260% 4.250%
07/28 5.300% 4.580% 4.290%
07/21 5.540% 4.750% 4.310%
07/14 5.510% 4.670% 4.350%
07/07 5.300% 4.450% 4.190%
  • Rate changes: Never; fully fixed for entire term
  • Benefits: Stable payments; builds equity faster; lower total interest costs than 30-year term
  • Alternative Strategy: Consider 30-year term and prepaying loan to preserve cash-flow flexibility
  • Useful for: Refinancing to lower total interest cost; retiring mortgage more quickly; building or rebuilding equity more quickly
  • Consider if: Buying second home; refinancing to build equity; paying off mortgage before life event (retirement, etc)
  • When shopping, ask about: If 15-year term makes the payment too high, whether 20-year term is available

What is a 15-year fixed-rate mortgage?

A loan used for purchasing or refinancing a home with an interest rate that never changes and a repayment term of fifteen years.

Why choose a 15-year fixed-rate mortgage (FRM)?

Like its 30-year sibling, your interest rate (and the mortgage's principal and interest payment) will never change. With a term half as long as a traditional 30-year FRM, you'll build equity more quickly and at lower total interest costs.

Should I choose a 15-year FRM?

While the overall answer is "yes," the reality is that shorter-term mortgages carry higher monthly payments despite lower contract interest rates than those with 30-year terms. This can make qualifying for a mortgage difficult, especially for first-time buyers. Even if you can, the higher monthly commitment for a 15-year mortgage may curtail needed flexibility in your budget to cover other expenses or goals, such as saving for retirement or paying down student-loan debt. Fifteen-year FRMs are often best for homeowners looking to refinance or those who have the ability to manage higher monthly payment comfortably.

What are the advantages of a 15-year FRM?

A 15-year FRM builds equity far more quickly than does a loan with a 30-year term and at much lower total interest costs overall. For example, after 7 years of a $200,000 15-year loan at 3.75% versus a 30-year loan at 4.75%, the 15-year term will have saved you almost $20,000 in interest cost and your remaining loan balance would be almost $55,000 less.

What are the disadvantages of a 15-year FRM?

If there is one drawback to a 15-year FRM compared against a 30-year it is that the monthly payment is considerably higher for the shorter-term loan; using the example above, more than $400 per month more. The higher payment means that a borrower with a given income can borrow much less money, making it hard to compete in today's high-priced housing markets. All things being equal, a borrower buying a median-priced home of $266,800 with a 20 percent down payment will need $61,626 in income with a 30-year mortgage -- or $80,433 with a 15-year term. Conversely, someone who has that $61,626 to qualify for a 30-year term can only cover a purchase price of $191,380 with a 15-year term and may not be able to locate suitable homes in desirable markets with this lower amount.

Is a 15-year, fixed-rate mortgage a good choice when buying a home?

Yes, provided qualification isn't an issue and there aren't better or more appropriate uses or unmet financial needs for those funds. One fairly common workaround is to select a 20-year term, or select a 30-year term and prepay the mortgage to achieve at least some term reduction and savings.

Are 15-year, fixed-rate mortgages a good choice for refinancing?

They often are, especially for homeowners well along in an existing 30-year mortgage; these can be used to chop years off of a remaining mortgage term, and often at the same or even lower than their current monthly payment. That said, there are other reasons for refinancing (such as improving cash-flow or draining equity from the property) so a 15-year FRM isn't a one-size fits all option.

Are there alternatives to a 15-year FRM?

As noted above, if a 15-year term brings a payment too high to comfortably handle, a 20-year term might do the trick, bringing similar interest savings and equity building but with a lower monthly obligation. As well, you might take a 20-year term, and when you feel more comfortable, prepay the mortgage to create a 15-year term.

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Displaying Today's Mortgage Rates for a $200,000 Refinance loan.
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