Conventional home loans often come with 30-year mortgage terms, but if you’re buying a home soon, it’s worth considering if a 15-year mortgage is the right option for you. Typically, 15-year mortgage rates are lower than rates for 30-year loans, which means you’ll pay less interest over time. The tradeoff is a higher monthly payment, but it could worth it if it makes sense for your budget. You can potentially save thousands of dollars in interest if you choose a 15-year loan over a traditional 30-year mortgage.
Do your homework, though, because shopping around and making sure you find the best mortgage rates will help you save even more money. Get educated and you’ll likely get a better deal on your home loan.
The best 15-year fixed mortgage rates of 2020
- Alliant Credit Union — Best for low down payment
- New American Funding — Best for people with bad credit
- Bank of America — Best for in-person lending
- Quicken Loans — Best for online lending
|Lender||Interest Rate||Minimum Down Payment||Minimum Credit Score|
|Alliant Credit Union||2.875%||0% for first time homebuyers
3% for repeat homebuyers
|New American Funding||2.875%||3%||620|
|Bank of America||2.875%||5%||620|
The 4 best 15-year fixed mortgage rates of 2020
Alliant Credit Union
With more than $11 billion in assets, Alliant Credit Unionis one of the largest credit unions in the nation. It offers a variety of home loans, including a 15-year fixed-rate mortgage with a competitive interest rate of 2.875%.
Alliant’s home loans don’t require large down payments, which makes them an attractive option for buyers who don’t have a lot of savings. Repeat buyers can put as little as 3% down on their homes and qualified first time buyers may not have to put anything down at all.
Loans with low down payments usually require private mortgage insurance (PMI), but Alliant doesn’t charge PMI for its zero-down loans. Repeat buyers can also avoid PMI by putting just 5% down.
Alliant also offers a program (Alliant Advantage Mortgage AAM) that pairs you up with a local real estate agent and loan officer in exchange for a rebate. If you buy your home through the program you can get up to $6,500 in cash back.
Overall, this lender is a great choice for homebuyers who don’t have a lot of cash on hand for a down payment but want to get into a home and start building equity now.
New American Funding
New American Funding is a family-owned mortgage lender headquartered in Orange County, California. It has 196 branches throughout the country and services more than 126,000 loans.
This lender offers a 15-year fixed mortgage with an interest rate of just 2.875% and a low minimum down payment. You’ll only need to put 3% down, so even if you don’t have a lot of savings, you may still be able to get into a home.
New American Funding is also a great option for buyers with bad credit. It uses a manual underwriting process, meaning that a person and not a computer will assess whether you qualify for a mortgage, which gives people with less than ideal credit a higher chance of getting approved.
Bank of America
If meeting with a loan officer face-to-face is important to you, you may want to consider Bank of America. It’s one of the largest banks in the country and has over 5,000 branches, so there’s likely one near you.
Bank of America offers a 15-year fixed-rate mortgage with a low interest rate of 2.875%. Its loans require a down payment of at least 5% and a minimum credit score of 620.
Bank of America offers some additional perks for existing clients. Preferred members may qualify for a $200 to $600 discount on mortgage origination fees.
The mortgage application process is also easier for Bank of America customers. If you apply online and are a Bank of America customer, the application can fill in your financial and contact information for you, which will save you a lot of time.
Quicken Loans is the nation’s largest mortgage lender. It doesn’t have any physical branches and offers a mortgage application that’s completely online. The lender also has mortgage advisors you can call if you need more support.
You may have to pay a higher interest rate for the convenience of working with Quicken Loans, though. Its 15-year mortgages currently have an interest rate of 3.375%, which is a little higher than the other lenders on this list.
On the upside, the loans only require a down payment of 3% and a minimum credit score requirement of 620.
If you don’t mind paying a little more for convenience and top-notch customer service, then Quicken Loans is a great option.
What is a 15-year fixed mortgage?
A 15-year fixed-rate mortgage is a type of home loan that breaks up your repayments over 15 years and has the same interest rate and monthly payment over the whole term. This type of mortgage is a good alternative to 30-year loans because it offers lower interest rates.
If you go with a 15-year mortgage, you’ll pay less interest over the life of the loan and build equity faster, but you’ll also have a higher monthly payment. That’s probably why 30-year fixed mortgages are still the most common type of home loan.
Still, if you can afford to pay a little more for housing each month, getting a 15-year mortgage is often a sound financial decision, and a safer bet than a 10-year mortgage, that can help you save a lot of money in the long run.
How should I choose the right 15-year fixed mortgage?
The main thing you should look for in a 15-year mortgage is a low interest rate. Make sure you shop around and compare the rates of a few different lenders to get the best deal.
If you don’t have a lot of savings, try to find a mortgage lender that accepts low minimum down payments of 3% or less.
You should also consider the type of underwriting process each lender uses. If you have a unique financial situation or less-than-average credit, your chances of approval will be higher with manual underwriting, so look for a mortgage lender that offers it.
It’s also important to opt for a lender that has good customer service. You’ll probably have a lot of questions during the mortgage process, so it’s nice to have a helpful, responsive loan officer to guide you through it.
Look into the fees each lender charges, as you’ll want to factor those in and find the lowest overall cost available to you.
The bottom line
If you can afford the higher monthly payments, opting for a 15-year mortgage is a smart financial move. You’ll pay much less interest over the life of your loan and will be mortgage-free in half the time. To maximize your savings, take your time and shop around to find the best 15-year mortgage rates.