What is a 15-year fixed-rate mortgage?

When you get a mortgage, you get to choose how long your loan term will be. Your loan term is the amount of time you have to repay your loan and affects your mortgage rate and monthly payment. The most common loans buyers choose are 30-year and 15-year fixed-rate mortgages.

Both loan term lengths come with their own set of advantages and drawbacks, depending on your goals and finances. When you get a 15-year mortgage, you’ll have a higher monthly payment, but you’ll also save on interest. Here, we’ll go over what a 15-year mortgage is, how it works, and the pros and cons of this loan term to help you decide if it’s right for you.

What is a 15-year mortgage?

A 15-year mortgage is a home loan that you pay back over the course of 15 years with scheduled payments. This type of loan can be used to either purchase a home or refinance a mortgage. Having a 15-year loan term allows you to pay off your home in half the time as a 30-year mortgage. Having a shorter loan term also significantly cuts down on the amount of interest you pay and brings down the total loan cost. Conventional, Federal Housing Administration (FHA), Department of Veterans Affairs (VA), and Department of Agriculture (USDA) loans all offer 15-year loan terms.

How does a 15-year fixed-rate mortgage work?

A 15-year fixed-rate mortgage has an interest rate that’s locked in when you close on the loan and never changes. This gives you a predictable monthly payment that allows you to budget for the long term. This differs from an adjustable-rate mortgage, which has an interest rate that is fixed for an introductory period and then adjusts on a recurring basis. With an ARM, your mortgage payment can fluctuate, and you’ll need to prepare for your mortgage rate to increase down the line.

The long-term upside of a 15-year fixed-rate mortgage is that you can save money on the amount of interest you’ll pay. The interest rate on a 15-year mortgage is typically lower than a 30-year mortgage. You’ll be paying interest for half the amount of time, which also saves you money.

However, 15-year mortgages come with higher monthly payments than loans that offer longer repayment terms. Because you have less time to pay off the loan, each monthly installment must be larger. The trade-off is that the interest rate and amount of interest paid over the term is lower.

For example, suppose you have a $350,000 loan with a 15-year loan term. Your monthly payment would be $2,906.44 at 5.75% (6.213% APR).¹ In contrast, a mortgage with a 30-year loan term would reduce your monthly payment to $2,241.09 at 6.625% interest (6.906% APR)².

Types of 15-year mortgages

There are different types of 15-year mortgages that are geared toward different types of borrowers. Each loan type has different pros, cons, and eligibility requirements. Here are a few of the most common types of home loans that offer 15-year mortgage terms.

Conventional loans

Conventional loans are not backed by any government program and are the most common type of loan. Here’s what you’ll need to get a conventional loan:

• 3% minimum down payment
• Minimum credit score of 620
• Maximum DTI of 50%
• Private mortgage insurance required if your down payment is less than 20%

FHA loans

FHA loans are backed by the Federal Housing Administration and are aimed at assisting lower- and middle-income households and first-time home buyers. Because these loans are backed by the government, lenders can offer looser eligibility requirements. Here’s what you’ll typically need to get an FHA loan.

• 3.5% minimum down payment
• Minimum credit score of at least 580
• Maximum DTI of 50%
• Mortgage insurance required

For borrowers with low credit scores and smaller down payments, FHA loans tend to be cheaper than conventional loans.

VA loans

VA loans are backed by the U.S. Department of Veterans Affairs and offered to eligible veterans and active-duty service members, along with qualifying surviving spouses. Like FHA loans, they’re built to make homeownership more accessible to certain home buyers. Here’s what you need to get a VA loan:

• No down payment requirement
• Credit requirement set by lender (Rocket Mortgage requires a minimum of 580)
• Certificate of Eligibility (COE)
• No mortgage insurance
• VA funding fee required

USDA loans

USDA loans are offered by the U.S. Department of Agriculture (USDA) to low- and moderate-income borrowers in qualifying rural areas. Here’s what you need to get a USDA loan:

• No down payment requirement
• Credit requirement set by lender
• Upfront fee required
• Mortgage insurance requirement

Rocket Mortgage® doesn’t offer USDA loans at this time, but we can help you evaluate your options when it comes to home lending.

What are the pros and cons of a 15-year mortgage?

To determine whether a 15-year mortgage is the right loan term for you, it’s important to understand all the advantages and disadvantages.

Pros of a 15-year mortgage

If your goal is to build equity, pay off your mortgage over a shorter loan term, and pay less in interest, you may find that a 15-year mortgage is the right fit for you. Let’s have a closer look at some benefits of the 15-year fixed mortgage.

Pay off mortgage faster

If you want to pay off what’s likely your largest debt and own your home outright at a faster pace than a 30-year mortgage allows, a 15-year mortgage could be the right option since it cuts your payoff period in half. Once it’s paid off, you won’t have to make a monthly mortgage payment, freeing up a large percentage of your budget for other uses.

Pay less interest overall

The shorter repayment term means you’ll end up paying less in interest over the life of the loan, saving you thousands of dollars in the long run. Not only will you be paying fewer years of interest, but you’ll also typically be able to score a lower interest rate by as much as a full percentage point.

Let’s say that your loan amount is $350,000, your mortgage rate is 6%, and your loan term is 30 years. By the time you’ve paid off your mortgage, you’ll have paid $405,434 in interest and $755,434 total for your loan.

If you got that same mortgage with a 15-year loan term instead, you’d only have to pay $181,630 in interest and $531,630 in total - a total savings of $223,804.

You can use our mortgage calculator to run the numbers and get a sense of your potential cash savings.

Access equity sooner

With a shorter loan term, you chip away at the principal loan balance at a faster rate and build home equity more quickly. Equity can be measured by taking the current value of the home and subtracting what you still owe on your mortgage. This equity can then be used along the way to borrow or draw credit against if you need additional funds to renovate, upgrade, or make other home improvements. If you have a conventional loan, you can cancel PMI once you reach 20% equity.

Cons of a 15-year mortgage

While 15-year mortgages come with many benefits, they’re not always the right option for every borrower. Let’s look at some disadvantages of the 15-year fixed-rate mortgage.

Higher monthly payments

The biggest drawback to a 15-year mortgage is the higher monthly payments that come with it. Although these mortgages come with lower interest rates, they also come with heftier monthly expenses that you’ll have to budget for because you’re basically paying your house off in half the time of a 30-year loan.

To return to our prior example, with a $350,000 loan and a 6% interest rate, a 30-year mortgage comes with a monthly payment of $2,098. A 15-year mortgage at the same rate requires you to make a monthly payment of $2,953. With a 15-year mortgage for the same amount and interest rate, your monthly payment is $855 higher, and that’s before property taxes and insurance are added in.

Higher income and credit score needed to qualify

With a shorter-term loan, you may have significantly higher monthly payments. And the higher the mortgage payment, the more income you will need to qualify for the loan. You may also need a higher credit score and a good debt-to-income ratio to show you can easily handle the mortgage payment of a shorter-term loan.

Even if you are approved for the loan, the higher mortgage payment could put pressure on your finances.

Challenges getting approved for a large mortgage

Lenders want to make sure you’re able to pay them back, and they also want to increase the odds of you making timely monthly payments. That’s why they’ll often decline to extend 15-year mortgages on more expensive properties, based on your individual financial situation, when you may qualify for a longer-term mortgage.

Should you refinance to a 15-year mortgage?

Whether or not it makes sense for you to refinance to a 15-year mortgage all depends on your specific situation and market conditions. You’ll want to consider factors like your existing interest rate, current market rates, your budget, and your financial goals.

When to refinance to a 15-year mortgage

If mortgage interest rates are dropping significantly, you plan on staying in your home for several years, and you’re not close to paying off your mortgage, you may wish to consider refinancing. It’s also important to confirm that the cost of refinancing will be offset by the savings you get with a new interest rate.

When interest rates are low

If the market has shifted and rates are considerably lower than they were when you first took out your loan, refinancing to a 15-year mortgage may not significantly change your monthly payment. If you can beat or match your current interest rate, it will help keep your new payment low, even on an expedited loan schedule. In this situation, you could stand to save big on interest without putting a strain on your household budget.

When you have an adjustable-rate mortgage

If you have an adjustable-rate mortgage (ARM), refinancing to a lower fixed-rate loan like a 15-year mortgage may help you save money. If you refinance before the initial temporary fixed period on your ARM interest rate expires, you can avoid a hike in your interest rate and monthly payment. With your new 15-year fixed-rate mortgage, your monthly payment will be consistent, and you’ll be able to abandon a loan that has interest rates that vary with the market.

When not to refinance to a 15-year mortgage

Here are a few reasons you might want to avoid refinancing to a 15-year fixed-rate mortgage. 

When interest rates are high

Since 15-year mortgages already have larger payments, high interest rates could make your payment difficult to manage. You can use an amortization calculator to look at different scenarios to determine when it’s worth it to refinance since this will show you the cost of the interest on the loan over time. You should also consider any additional costs from your lender to refinance.

When closing costs outweigh savings

Anytime you refinance, you must pay closing costs on the loan. The amount you’ll pay will vary based on the size of your loan, but you can typically expect closing costs to range between 2% and 6% of the loan amount. If you calculate your closing costs and realize that figure outweighs the total amount you’ll save in interest, then it doesn’t make sense to refinance.

You plan on moving

After you refinance, it will take some time before the amount you’ve saved on interest exceeds the amount you paid in closing costs. Once you’ve recouped your closing costs, this is known as your breakeven point, and that’s when you start saving. To see the benefits of refinancing, you’ll need to plan on staying in the house for at least a few more years to break even. If you’re planning on moving soon, you’ll be better off sticking with your existing mortgage.

FAQ on 15-year mortgages

Let’s answer some of the most frequently asked questions regarding 15-year mortgages.

What are the disadvantages of a 15-year mortgage?

A 15-year mortgage comes with higher monthly mortgage payments, which leaves you less money in the budget to use for other expenses. This type of mortgage also might not be available for more expensive homes, since lenders want to ensure you will be able to pay them back.

Do I have to refinance to a 15-year mortgage if I want to pay my 30-year mortgage faster?

No. You’re free to make extra payments on your mortgage to help you pay it off faster. Contact your lender and let them know you’d like the additional money to go toward the loan principal to help lower the amount of interest that accrues on the loan. Keep in mind that some lenders may charge a prepayment penalty if you repay your loan - in part or in full - ahead of schedule. Ask your lender about any fees before you make additional payments.

How can I qualify for a 15-year fixed-rate mortgage?

It may be harder to qualify for a 15-year mortgage because lenders need to confirm you can afford the higher payments. Most lenders want you to have a high credit score and low debt-to-income ratio. Do what you can to boost your credit score and pay off existing debts before applying.

How can I tell if a 15-year mortgage is right for me?

Look at your financial situation and consider how much money you can afford to spend on your mortgage each month. You can use our refinance calculator to see your new monthly payment and how much you stand to save on interest.

If you can afford the higher monthly payment without straining your budget, a 15-year loan may be a great fit. However, if money is tight, a 30-year mortgage with a lower monthly payment will be a better choice.

The bottom line: Consider the pros and cons of a 15-year mortgage

Getting a 15-year fixed-rate mortgage can help you save a significant amount of money on interest, build home equity faster, and pay off your mortgage quicker. However, if you apply for or refinance to a 15-year fixed-rate mortgage, you can also expect to be making larger monthly payments and tie up money that could be spent on other priorities.

Have you weighed the pros and cons and decided that you’d like to apply for a 15-year mortgage? If you’re ready to move forward, start the approval process with Rocket Mortgage® today.

¹ An interest rate of 5.75% (6.213% APR) is for the cost of 2.00 point(s) ($7,000.00) paid at closing. On a $350,000 mortgage, you would make monthly payments of $2,906.44. Monthly payment does not include taxes and insurance premiums. The actual payment amount will be greater. Payment assumes a loan-to-value (LTV) of 80.00%. Rate valid as of December 10, 2025.

² An interest rate of 6.625% (6.906% APR) is for the cost of 1.875 point(s) ($6,562.50) paid at closing. On a $350,000 mortgage, you would make monthly payments of $2,241.09. Monthly payment does not include taxes and insurance premiums. The actual payment amount will be greater. Payment assumes a loan-to-value (LTV) of 80.00%. Rate valid as of December 10, 2025.