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The Average Mortgage Length In The U.S.

February 02, 2024 6-minute read

Author: Lauren Nowacki

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When deciding between certain products, it can be easy to just go with the most popular. But when choosing the right mortgage for your goals, the most popular option may not be the best decision.

Let’s explore your mortgage term length options and the benefits and drawbacks of each so you can find the right mortgage for you. Keep in mind that you might be surprised by not only the most popular loan term but also the average mortgage length, which aren’t the same.

What Is The Average Home Loan Length?

A mortgage allows a borrower a certain amount of time to pay off the loan. The most common amount of time, or “mortgage term,” is 30 years in the U.S., but some mortgage terms can be as short as 10 years.

Most people with a 30-year mortgage won’t keep the original loan for 30 years. In fact, the average mortgage length is under 10 years. That’s not because these borrowers pay the loan off in record time. It’s more likely that homeowners refinance into a new mortgage or purchase a new home before the term is up. According to the National Association of REALTORS® (NAR) 2022 report on buyer and seller generational trends, buyers only expect to stay in the home they purchase for a median of 12 years.

So why, then, is the 30-year option the most popular mortgage term in America? It has to do with several potential factors, including current mortgage rates, the monthly payment, the type of home being purchased and the borrower’s financial goals.

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What Are Your Mortgage Term Length Options?

There are two types of mortgages with regard to interest rate: a fixed-rate mortgage and an adjustable-rate mortgage (ARM). With fixed-rate mortgages versus ARMs, your interest rate stays the same throughout the life of the loan instead of potentially fluctuating.

With an ARM, the interest rate adjusts throughout the loan term. ARMs are usually only 30-year loans, while fixed-rate loans have various term options for borrowers.

Most fixed-rate mortgages will have a 30-year or 15-year term, though some lenders offer 20-year terms and others even allow borrowers to choose their term.

Home buyers should consider all home loan options before committing to a mortgage. Next, we’ll take a closer look at these products to gain a better understanding of each.

15-Year Mortgage

Some home buyers may opt for a 15-year mortgage because of one major factor: total interest paid. With a shorter mortgage term, a borrower pays off the loan quicker. That means they’ll pay less total interest because they’re paying interest for half the amount of time as a 30-year home loan. Additional benefits to paying the loan off faster is that homeowners will build equity faster and own their home free and clear much sooner.

While a 15-year mortgage has its advantages, many homeowners shy away from this type of loan. It can save borrowers a lot of money in the long run, but it comes with higher monthly payments.

30-Year Mortgage

As mentioned, the 30-year mortgage is the most common home loan term in the U.S. With this mortgage, borrowers have 30 years to pay the loan off, along with a fixed or adjustable interest rate.

Because the payment is spread out over the maximum amount of time, the 30-year mortgage has the lowest monthly payment among all term-length options. However, since you’ll be paying the longest amount of time, you’ll likely pay the most in total interest.

20-Year Mortgage

For borrowers who don’t want a 30-year mortgage but think the monthly payment on a 15-year mortgage is a little tight, a 20-year mortgage could be a good compromise. While the standard option for 20-year mortgages is a conventional loan, they’re also available as VA and FHA loans.

With a term length between a 15-year and 30-year mortgage, you can find some middle ground. But how do you decide between a 20-year and a 30-year mortgage? One advantage of 20-year mortgages is that they have a lower interest rate than a 30-year mortgage and will help you save on overall interest paid over time. However, you won’t save as much in interest as you would with a 15-year loan. And, while 20-year mortgages have a lower monthly payment than a 15-year and therefore offer more financial flexibility, they still have a higher monthly payment than a 30-year mortgage.

YOURgage®

Rocket Mortgage® has a loan option called YOURgage, which allows you to choose a fixed-rate term of anywhere from 8 – 29 years. This loan is more customized to a homeowner’s financial goals and can give them some control over their monthly payment amount.

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Shorter Vs. Longer Mortgage Terms

Mortgage term length is one factor that helps determine the monthly payment amount and amount of interest paid over time. When deciding on a mortgage term length, consider the following.

Longer Mortgage Terms

Longer mortgage terms come with higher interest rates and a higher amount of interest paid over the length of the loan. While longer mortgage terms involve more interest, the advantage borrowers have with these loans is the lower monthly payments.

Since the payment is spread over more years, you’ll pay less each month. For this reason, 30-year loans are a popular type of mortgage among homeowners, especially first-time home buyers. Several factors determine the interest rate a borrower will pay, and you can lower the interest rate in several ways, including a mortgage buydown.

Shorter Mortgage Terms

Homeowners with a 15- or 20-year mortgage can expect to pay more in monthly payments than those with a longer-term loan. That’s because they have less time to pay back the loan. The upside is that they’ll likely have a lower mortgage interest rate and will ultimately pay much less in total interest.

15- And 30-Year Term Length Options Compared

We’ve talked a lot about saving money on your monthly payments versus saving money on your total interest. To get a better understanding of just how much the difference between 15- and 30-year mortgages can be, it may be helpful to consider a real-life example. *For the sake of simplicity, we’ll use the same interest rate for both loans.

15-Year Fixed for $200,000 Mortgage

  • Loan term: 15 years
  • Interest rate: 5%
  • Monthly payment: $1,581.59
  • Total interest paid: $84,685.71

30-Year Fixed for $200,000 Mortgage

  • Loan term: 30 years
  • Interest rate: 5%
  • Monthly payment: $1,073.64
  • Total interest paid: $186,511.67

In the example above, you’d save around $500 on your monthly payment with a 30-year mortgage. However, with a 15-year mortgage, you’d save around $101,825 on total interest.

Wondering what your situation might look like? Plug your own numbers into our mortgage rate calculator to compare your payment across the various mortgage terms.

*Please note, the monthly payments in these examples do not include escrow payments. Total interest paid is based on the borrower keeping the mortgage for its full term and not making extra payments on the loan. Interest rates vary depending on several factors, including a borrower’s credit score, down payment, loan amount, loan type and home location.

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Is The Average Mortgage Term Right For You?

When deciding the right mortgage term for you, consider your budget and long-term financial goals. To help with your decision, consider the following questions.

Are You Planning To Buy A Large Home?

Because monthly payments are lower with a 30-year mortgage, you’ll likely be able to afford more house with the long-term loan. If you’re planning on purchasing a large or luxury home, a 30-year mortgage may be a better option.

What Are Your Other Financial Goals?

If you have other financial goals, such as saving for a child’s education or paying off student loans, you may benefit from the low monthly payments offered by a 30-year mortgage. The money you’ll save from having a lower monthly payment can go toward saving money or paying off debts. Using the comparison example above, if you opted for a 30-year loan instead of 15-year, you could use the roughly $508 you’d save on your monthly payment to pay off other debts or add to your savings account.

Are You Prepared To Carry The Long-Term Debt?

You’ll need to ask yourself if you’re comfortable with the long-term commitment that comes with a 30-year mortgage. Keep in mind you may be able to pay down the mortgage early, but some lenders charge an early prepayment fee. Before you commit to this long-term debt, ask your lender about prepayment penalties and create a plan for paying the loan off ahead of time if you can.

The Bottom Line: Consider All Mortgage Term Options

The average mortgage term is 30 years, but that doesn’t mean you have to get a 30-year loan – or take 30 years to pay it off. While it offers a relatively low monthly payment, this term will likely require you to pay the most in total interest if you keep it for 30 years. When choosing your mortgage term, consider your financial goals and monthly budget, talk with a mortgage expert and get the best mortgage rate possible – and that goes for whichever term you choose.

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Lauren Nowacki

Lauren is a Content Editor specializing in personal finance and the mortgage industry. Her writing focuses on reporting the best places to live in the U.S. based on certain interests and lifestyles. She has a B.A. in Communications from Alma College and has worked as a writer and editor for various publications in Philadelphia, Chicago and Metro Detroit.