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Which is Best: a 10 or 30 Year FRM? Calculate Ten Versus Thirty Year FRM Refi Home Loans

Compare 10 & 30 Year Fixed Rate Mortgages

This calculator makes it easy to compare the monthly payments for any 2 fixed-rate mortgages (FRMs).

By default the left column is set to a 10-year amortization while the right column is set to a 30-year amortization, but you can change either of these terms to quickly & easily compare the monthly payments for any fixed-rate mortgages (FRMs). Due to historically low interest rates FRMs are currently far more popular than adjustable-rate loans. If you would like to compare FRMs, ARMs & interest-only loans you can use this calculator.

The button at the bottom of the calculator also enables you to create a printable amortization schedule for both loans at the same time. Current rates are displayed below.

Description 10 YR FRM 30 YR FRM
House price: [?]
Downpayment: [?]
Loan APR: (Get Current Rates) [?]
Term: [?]
Property taxes (%): [?]
Homeowner insurance (%): [?]
PMI (%): [?]
Monthly HOA fees ($): [?]
Closing costs (if financed in loan): [?]
All-in monthly payment: [?]
Principal & Interest: [?]
Taxes, Insurance, PMI & HOA: [?]
Amount Borrowed (exclusive of closing cost): [?]
Amount Borrowed (inclusive of closing cost): [?]
Total Interest Expense: [?]

Current Ten Year Mortgage Rates Available Locally

The following table shows current 10-year mortgage rates in your local area. You can click on the Purchase tab to switch over to home purchase loans, or click on the Product menu to select a different loan duration.

What Loans Do Home Buyers Choose?

Across the United States 88% of home buyers finance their purchases with a mortgage. Of those people who finance a purchase, nearly 90% of them opt for a 30-year fixed rate loan. The 15-year fixed-rate mortgage is the second most popular home loan choice among Americans, with 6% of borrowers choosing a 15-year loan term.

Loan Type Percent of Borrowers Buying a Home Percent of All Home Buyers
30-year Fixed 90% 79.2%
15-year Fixed 6% 5.28%
Adjustable-rate 2% 1.76%
Other Fixed-Rate Loan Terms 2% 1.76%
Use Any Type of Financing 100% 88%
Paid Cash in Full N/A 12%

Source: Freddie Mac's 2016 home buyer statistics, published on April 17, 2017.

When interest rates are low (as they were after the global recession was followed by many rounds of quantitative easing) home buyers have a strong preference for fixed-rate mortgages. When interest rates rise consumers tend to shift more toward using adjustable-rate mortgages to purchase homes.

Home buyers who needed low initial monthly payments to qualify may refinance away from ARM loans and 30-year fixed loans to shorter duration FRMs to access low interest rates throughout the duration of their loan and build home equity faster.

Advantages of a 30-Year Mortgage

The big advantage of a 30-year home loan over a 15-year loan is a lower monthly payment. This lower payment in turn makes it easier for home buyers to qualify for a larger loan amount.

If the homeowner has other investments which offer superior returns to real estate then they can invest the monthly difference into those higher yielding investments.

Homeowners can also deduct mortgage interest expense from their income taxes on the first $750,000 of mortgage debt. Slowly paying down mortgage debt while accumulating assets in a tax-advantaged retirement account can help people compound wealth quicker.

Provided one has a stable job & a stable source of income, financing their home using a 30-year loan offers great flexibility. If interest rates rise, the monthly loan payments do not change. If interest rates fall, the home buyer can refinance into a lower rate and/or a shorter duration loan. And if an owner comes into some money through a work bonus, an inheritance or another winfall they can apply any extra cash to pay down their loan quicker.

Disadvantages of a 30-year Mortgage

Of course the pro for one type of loan is the con for another. The above advantages can also be viewed as disadvantages in certain circumstances. For example, if the cap on mortgage interest deductability is lowered then that benefit is reduced. And if the stock market declines sharply after one invests aggressively near peak valuations then they probably would have been better off using that money to pay down their mortgage quicker.

The flexibility of a 30-year payment plan can be both a blessing and a curse. For those who are disciplined making extra payments while retaining the longer duration loan can be a good move. But many people find ways to spend whatever "extra" cash they have laying around & for these people a shorter duration loan that builds equity faster can be a great decision.

Advantages of a 10-Year Home Loan

 

Buyers who can afford the slightly higher monthly payment associated with a shorter duration mortgage have a number of advantages.

  • Lower interest rates: While both loan types have similar interest rate profiles, the 15-year loan typically offers a lower rate to the 30-year loan. The spreads change over time, but the 15-year is typically about a half a percent lower than the 30-year. The 10-year is typically priced at about 1/5th to 1/10th of a percent lower than the 15-year option..
  • Build home equity much faster: Historically American homeowners typically move homes or refinance about every 5 to 7 years. After the Great Recession this window moved out to about 10 years. If a person stretches their loan payments out to 30-years they build limited equity in their home in the early portion of their loan. A person who pays off a home in a third of the time is not making a payment which is three times as large. There are other costs of ownership including property taxes, insurance, maintenance & in some cases HOA fees. These other expenses can make up to 1/3 of the typical monthly expense on a 30-year mortgage, so paying off a specified amount of debt in 10 years rather than 30 years may only represent a doubling rather than a tripling of total monthly payment.
  • Greater life certainty: The recovery since the 2008 financial crisis has been uneven, with increasing income inequality & a greater sense of economic uncertainty than just about any economic recovery since the great recession which followed the 1929 stock market crash. The rise of globalism, monopoly technology platforms, distributed software with zero marginal cost & artificial intelligence are likely to create massive & ongoing waves of structural unemployment. Few people know what the world will be like in 20 years, so perhaps it doesn't make sense to finance the largest purchase of their lives across 30 years. Those who build equity faster will have greater certainty in their lives & won't be anywhere near as worried about what happens if they lose their job 23.5 years from today.

Monopoly Board.

The following table shows loan balances on a $200,000 home loan after 5, 10 , 15 & 20 years for loans on the same home.

Mortgage Type 10-YR FRM 30-YR FRM
Interest Rate (APR) 2.895% 3.575%
Monthly Principal & Interest $1,921.54 $906.48
Total Monthly Payment $2,425.70 $1,410.64
Loan Balance 5 Years $107,216.01 $179,624.58
Equity Built, 5 Years $142,783.99 + Appreciation $70,375.42 + Appreciation
Remaining P & I payments 60 300
Loan Balance 10 Years $0.00 $155,267.83
Equity Built, 10 Years $250,000 + Appreciation $94,732.17 + Appreciation
Remaining P & I payments 0 240
Loan Balance 15 Years $0 $126,151.61
Equity Built, 15 Years $250,000 + Appreciation $123,848.39 + Appreciation
Remaining P & I payments 0 180
Loan Balance 20 Years $0 $91,345.98
Equity Built, 20 Years $250,000 + Appreciation $158,654.02 + Appreciation
Remaining P & I payments 0 120
Total Interest Expense $30,584.37 $126,334.03

Please note the above used interest rates were relevant on the day of publication, but interest rates change daily & depend both on the individual borrower as well as broader market conditions.

The above calculations presume a 20% down payment on a $250,000 home, any closing costs paid upfront, 1% homeowner's insurance & an annual property tax of 1.42%.

Historical 15-YR & 30-YR Mortgage Rates

The following table lists historical average annual mortgage rates for 15-year & 30-year mortgages. The 15-year typically trades at about a 0.5% discount to the 30-year & the 10-year typically trades at a small discount to the 15-year.

Year 30-YR FRM Rate 30-YR Points 15-YR FRM Rate 15-YR Points 15 vs 30 Rate Diff
2016 3.65 0.5 2.93 0.5 -0.72
2015 3.85 0.6 3.09 0.6 -0.76
2014 4.17 0.6 3.29 0.6 -0.88
2013 3.98 0.7 3.11 0.7 -0.87
2012 3.66 0.7 2.93 0.7 -0.73
2011 4.45 0.7 3.68 0.7 -0.77
2010 4.69 0.7 4.1 0.7 -0.59
2009 5.04 0.7 4.57 0.7 -0.47
2008 6.03 0.6 5.62 0.6 -0.41
2007 6.34 0.4 6.03 0.4 -0.31
2006 6.41 0.5 6.07 0.5 -0.34
2005 5.87 0.6 5.42 0.6 -0.45
2004 5.84 0.7 5.21 0.6 -0.63
2003 5.83 0.6 5.17 0.6 -0.66
2002 6.54 0.6 5.98 0.6 -0.56
2001 6.97 0.9 6.5 0.9 -0.47
2000 8.05 1 7.72 1 -0.33
1999 7.44 1 7.06 1 -0.38
1998 6.94 1.1 6.59 1.1 -0.35
1997 7.6 1.7 7.13 1.7 -0.47
1996 7.81 1.7 7.32 1.7 -0.49
1995 7.93 1.8 7.48 1.8 -0.45
1994 8.38 1.8 7.86 1.8 -0.52
1993 7.31 1.6 6.83 1.6 -0.48
1992 8.39 1.7 7.96 1.7 -0.43
1991 9.25 2
1990 10.13 2.1
1989 10.32 2.1
1988 10.34 2.1
1987 10.21 2.2
1986 10.19 2.2
1985 12.43 2.5
1984 13.88 2.5
1983 13.24 2.1
1982 16.04 2.2
1981 16.63 2.1
1980 13.74 1.8
1979 11.2 1.6
1978 9.64 1.3
1977 8.85 1.1
1976 8.87 1.1
1975 9.05 1.1
1974 9.19 1.2
1973 8.04 1
1972 7.38 0.9

Source: Freddie Mac PMMS.

20% Down Payment

Home buyers who have a strong down payment are typically offered lower interest rates. Homeowners who put less than 20% down on a conventional loan also have to pay for property mortgage insurance (PMI) until the loan balance falls below 80% of the home's value. This insurance is rolled into the cost of the monthly home loan payments & helps insure the lender will be paid in the event of a borrower default. Typically about 35% of home buyers who use financing put at least 20% down.

Making a Deposit.

Conforming Mortgage Limits

As of 2018 Congress set the conforming loan limit for single unit homes across the continental United States to $453,100, with a ceiling of 150% that amount in areas where median home values are higher. The limit is as follows for 2, 3, and 4-unit homes $580,150, $701,250, and $871,450. The limits are higher in Alaska, Hawaii, Guam & the U.S. Virgin Islands. Loans which exceed these limits are classified as jumbo loans.

Homes NOT in Designated High-cost Areas

The limits in the first row apply to all areas of Alabama, Arizona, Arkansas, Delaware, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Mexico, North Dakota, Ohio, Oklahoma, Rhode Island, South Carolina, South Dakota, Texas, Vermont, Wisconsin & most other parts of the continental United States.

The limits in the second row apply to all parts of Alaska, Guam, Virgin Islands, Washington D.C & some parts of Hawaii.

Units 1 2 3 4
Continental U.S. $453,100 $580,150 $701,250 $871,450
Alaska, Hawaii, Guam & U.S. Virgin Islands $679,650 $870,225 $1,051,875 $1,307,175

Homes in Designated High-cost Areas

The areas covered in this table are further detailed below the map in state-by-state tables.

Units 1 2 3 4
Continental U.S. $679,650 $870,225 $1,051,875 $1,307,175
Alaska, Hawaii, Guam & U.S. Virgin Islands $1,019,475 $1,305,325 $1,577,800 $1,960,750