Rates on 15-year mortgages are usually lower than 30-year mortgage rates, which means you can save a lot by simply choosing a 15-year loan term. Lenders consider a shorter loan term less risky, which is why they’re willing to offer lower mortgage rates.
Beginning in late October 2023, 15-year fixed mortgage rates began to decline and, according to the mortgage rates forecast, aren’t expected to rise significantly in the near future. Rates on 30-year loans, moving roughly in tandem, finally dipped below 7% in mid-December. That’s good news for potential homebuyers, who have been weathering a storm of high interest rates and low housing stock since at least August.
Checking mortgage rates daily or weekly is a great way to get a feel for the market and what interest rates you’re likely to see when you apply for a home loan. Unsure of where to look? A good source for weekly rates is Freddie Mac’s Primary Mortgage Market Survey, which releases national averages every Thursday and collects historical rates going back to 1971. For daily rates, try the St. Louis Fed, which has both 15- and 30-year rate data.
There are seven main factors that impact the 15-year mortgage rate you’re offered, including:
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A 15-year fixed-rate mortgage is a home loan paid in equal installments over 15 years. That 15-year period is known as the “loan term,” and a 15-year term usually comes with a higher monthly payment — but lower overall costs — than a 30-year fixed-rate mortgage.
If you’re trying to decide on a 15- versus 30-year mortgage, there are three main things to consider:
The table below provides a quick summary of how the differences between these two loan terms will affect you as a borrower. A 
means that it’s the more expensive option of the two loans, and a 
means that it’s the less expensive option.
15-year mortgage | 30-year mortgage |
|
|---|---|---|
| Monthly payment | | |
| Interest rate | | |
| Interest costs | | |
Example: How much you can save with a 15-year vs. 30-year loanAs the example below shows, in the current rates environment you could save over $47,500 in interest just by going with a 15-year loan instead of a 30-year loan.
15-year mortgage | 30-year mortgage |
|
|---|---|---|
| Loan amount | $350,000 | $350,000 |
| Interest rate | 6.38% | 6.95% |
| Monthly payment (principal and interest) | $2,184.69 | $2,316.82 |
| Total interest paid | $436,488.16 | $484,054.36 |
| Total amount paid over loan term | $786,488.16 | $834,054.36 |
Pros | Cons |
|---|---|
You’ll pay off your loan quicker. Your interest rate will be lower. You’ll save thousands of dollars in interest. You’ll build home equity faster. | You’ll have to refinance if you want to switch to a longer loan term. Your payment will eat up more of your monthly budget. You’re locked into a higher payment for the entire loan term. You’ll have to meet tougher qualification requirements. |
You can refinance an existing 15-year mortgage and replace it with a new 15-year loan that has a lower rate — assuming that current mortgage rates are lower than they were when you closed on your original loan. The process is essentially the same as any other home loan: Your lender verifies your credit history, income and home equity to ensure you meet the minimum mortgage requirements.
Typical mortgage refinance requirements include:
Loan type | Credit score | Income verification required? | Max. LTV ratio |
|---|---|---|---|
| Conventional rate-and-term refinance | 620 | 97% |
|
| FHA rate-and-term refinance | 580 | 97.75% |
|
| VA rate-and-term refinance | No minimum, but many lenders require 620+ | 100% |
*LTV ratio stands for loan-to-value ratio.
However, if you’re switching from a 30-year to a 15-year term, there may be some extra hoops for you to jump through. Here’s what you need to know if you’re refinancing into a 15-year loan from a 30-year loan:
| Loan type | Advantages | Restrictions |
|---|---|---|
| Conventional rate-and-term refinance |
|
|
| FHA streamline refinance |
|
|
| VA interest rate reduction refinance loan (IRRRL) |
|
|
A 15-year fixed-rate loan makes sense if you can commit to a higher payment for the term of the loan. If you’re worried about your job stability or need to plan for an enormous expense (like a new car or college tuition), you’re better off making extra payments on a 30-year mortgage to pay off your mortgage early.
An adjustable-rate mortgage (ARM) offers a lower initial rate for a set time. Once the “teaser rate” period ends, your rate will adjust based on the ARM terms you chose, which could cause a big jump in your monthly payment. With a fixed-rate loan, your interest rate and the principal and interest portion of your monthly payments are the same for the loan’s entire term.
The main drawback of a 15-year mortgage is that you’ll have higher monthly payments, and you’re locked into them. However, if your budget gets tight, you do have the option to refinance into a longer-term loan, which isn’t usually an option available to borrowers with a 30-year loan unless they enter a loan modification program.
