The best 15-year mortgage rates for 2022

Effective today, February 7, 2022, the 15-year fixed mortgage rate is 3.17% and the 15-year jumbo mortgage rate is 3.44%. These rates are not the indicative rates you may see advertised online and, based on our methodology, they should be more representative of what customers can expect to receive based on their qualifications. You can read more about what makes our pricing different in the Methodology section of this page.

Just because it’s common for homeowners to take out a 30-year mortgage doesn’t mean you have to. Borrowers who get the best 15-year mortgage rates can save tens of thousands of dollars in interest over the life of their loan. While it comes with a higher down payment, those who plan correctly will be able to take advantage of lower interest rates and the ability to accumulate home equity much faster.

Even with the big savings on interest payments, you’ll want to make sure your financial situation is strong enough to afford the big payments. To help you with your decision, we’ve compiled a list of the best 15-year mortgage rates, along with information like the pros and cons of choosing this type of mortgage.

Current 15-year mortgage rates

Type of loan To buy Refinance
15 years fixed 3.17% 3.24%
15 year fixed jumbo 3.44% 3.62%
National averages of the lowest rates offered by over 200 of the country’s major lenders, with an 80% loan-to-value (LTV) ratio, an applicant with a FICO credit score of 700-760 and no mortgage points.

Today’s rates for all types of mortgages

Type of loan To buy Refinance
Fixed 30 years 3.97% 4.04%
30-year fixed FHA 3.92% 4.01%
VA 30 years fixed 4.10% 4.20%
30 year fixed jumbo 3.74% 3.80%
20 years fixed 3.83% 3.89%
15 years fixed 3.17% 3.24%
15 year fixed jumbo 3.44% 3.62%
10 years fixed 3.10% 3.15%
10/1 ARM 3.06% 3.10%
10/6 ARM 4.76% 4.83%
ARM 7/1 3.05% 3.10%
Jumbo 7/1 ARM 2.84% 2.89%
ARM 7/6 4.51% 4.50%
Jumbo 7/6 ARM 3.03% 3.30%
ARM 5/1 2.89% 2.94%
Jumbo 5/1 ARM 2.69% 2.74%
5/6 ARMS 4.29% 4.28%
Jumbo 5/6 ARM 2.96% 2.98%
National averages of the lowest rates offered by over 200 of the country’s major lenders, with an 80% loan-to-value (LTV) ratio, an applicant with a FICO credit score of 700-760 and no mortgage points.

What is a 15 year mortgage?

A 15 year mortgage is a fixed rate loan for the purchase of a home. The monthly payment, which includes capital and interest, remains the same throughout the life of the mortgage, which is 15 years.

Who Should Consider a 15 Year Mortgage?

Homeowners who want to save significantly on their home loan and can afford to pay the higher amount monthly mortgage payments best suited for 15-year mortgages. This is because these types of loans tend to have lower interest rates – government-backed agencies like Fannie Mae and Freddie Mac tend to impose price adjustments on loan levels, driving up mortgage costs over 30 years.

Borrowers considering 15-year mortgages should consider whether they can afford the monthly payments, as they will be higher compared to a 30- or 20-year mortgage because you pay off the loan in less time. It’s essential that you determine if you have enough savings aside and enough room in your budget to afford higher payments in addition to your other monthly obligations.

Does the Federal Reserve set mortgage rates?

It’s a common misconception that the Federal Reserve decides traditional mortgage rates. Although it does not do so directly, the Federal Reserve encourages lenders to raise or lower their rates.

How it works is that the Federal Reserve (more specifically, the Federal Open Market Committee) determines the federal funds rate which impacts adjustable and short-term interest rates to ensure stability in the economy. These two rates are those at which financial institutions such as banks lend money to each other in order to respect the levels of reserve requirements. This means that when rates rise, it is more expensive for financial institutions to borrow from other financial institutions.

It is because of these higher costs that interest rates tend to rise as they will be passed on to the consumer when it comes to loans such as mortgages. Other factors that also influence rates include individual factors such as a borrower’s assets, liabilities, credit, and debts.

What is a good 15-year mortgage rate?

A good rate will depend on your credit profile and other financial considerations. Lenders want to make sure you can consistently pay your mortgage on time and look at your financial situation, such as whether you have enough assets, a stable income, and not too much debt that will make it difficult for you to repay your mortgage. mortgage.

They will also review your credit score. The higher yours, the more likely you will be considered a low-risk borrower, which equates to lower interest rates. On the other hand, the lower your credit score, the more lenders consider you a higher risk, which means you will be offered higher rates than the average rate mentioned above.

What are the differences between a 15-year and a 30-year mortgage?

A 15 year and 30 year mortgage are fixed rate loans. The biggest difference between the two is that they have different loan terms. A 30 year mortgage will take 30 years or 360 monthly payments. Compare that to a 15-year term, which will take less time and borrowers will end up paying less interest over the loan term of 180 months.

Because a 30-year mortgage spreads your monthly payments over a longer period, you’ll make lower monthly payments than a 15-year mortgage. However, it also means that you will end up paying more interest over the life of the loan due to both the length of the loan and usually a higher interest rate.

Are the interest rate and APR the same?

Terms interest rate and APR tend to be often confused, with many consumers thinking they are one and the same (they are not). It is important to understand the differences in order to understand exactly what you will pay for your mortgage.

The interest rate is just that, the cost you will pay to borrow money. The APR, on the other hand, includes the interest rate plus any additional fees involved in obtaining the mortgage. These costs include application fees, brokerage fees, discount points and closing costs. It also takes into account the discounts you get in return. The APR is usually expressed as a percentage.

It is because of these additional costs that the APR is higher than the interest rate. There are some exceptions, for example when a lender gives a refund for part of the interest charged.

Why are rates lower for a 15-year mortgage?

Mortgage rates are set based on bond prices in the mortgage-backed securities market. Bond investors want to put their money in a low-risk investment that offers a decent rate of return that will keep up with the rate of inflation.

Since inflation rates tend to rise over time, longer-term loans will have higher interest rates than short-term ones. This is because investors cannot accurately predict inflation rates any longer in advance.

Freddie Mac and Fannie Mae, two government-backed agencies, are also imposing price adjustments for lending levels, driving up 30-year mortgage costs. Many 15-year mortgages don’t have these additional fees, which results in a lower rate.

When is a 15 year mortgage a smart option?

A 15-year mortgage is a smart option for borrowers who want to save money on interest, can afford larger monthly payments, and can still meet their other financial goals and responsibilities. It’s also smart for people who have a stable and reliable income.

For example, borrowers who want to take out a 15-year mortgage but cannot afford to set aside money in their retirement accounts or savings goals such as creating a emergency fund should probably stick with a longer-term mortgage (a 20-year term is a happy medium). This way, the lower monthly payments allow them more leeway in their monthly budget.

For borrowers who have variable income or sporadic sources of income, a 15-year mortgage makes sense if there is a realistic plan. In other words, borrowers should take into account that they may not earn enough in any given month to make the monthly payments. Having a plan, like having larger savings reserves, can ensure that borrowers can always make payments on time and not put their home at risk.

If you make sure you have a plan, the savings are worth it. Let’s say you have a $300,000 mortgage and the rate is 4.25% for a 30-year term, compared to 4.00% for a 15-year term. At the end of the 30-year term, you will have paid $231,295.08 in interest compared to $99,431.48, a savings difference of $131,863.60. It is quite important.

However, the price savings equates to a much higher monthly payment. The payment for the 30-year mortgage will be $1,475.82, compared to the 15-year loan, which is $2,219.06. That’s why it’s a good idea to research the lowest rates and compare different terms to make sure you can comfortably afford the mortgage.

How we choose the best 15-year mortgage rates

In order to assess the best 15-year mortgage rates, we first had to create a credit profile. This profile included a credit score ranging from 700 to 760 with a home loan to value (LTV) ratio of 80%. With this profile, we’ve averaged the lowest rates offered by over 200 of the nation’s top lenders. As such, these rates are representative of what real consumers will see when shopping for a mortgage.

Remember that mortgage rates can change daily and this data is provided for informational purposes only. A person’s personal credit and income profile will be the determining factors of the loan rates and terms they can obtain. Loan rates do not include amounts for taxes or insurance premiums and individual lender terms will apply.

Darcy J. Skinner