A 10-year mortgage is less common than other types of mortgages, but it has some unique advantages. Though your monthly mortgage payments will be quite high, the interest rates on 10-year mortgages are usually lower than what you can get on a 30-year mortgage.
If you can afford the hefty monthly payments, this more niche loan term can save you a significant amount of money over the long term.
Here’s what you need to know about 10-year mortgages, how they work and how to find the lowest rate for your situation.
What is a 10-year mortgage?
A 10-year mortgage works exactly the same way as other kinds of mortgages, but instead of repaying your mortgage in 15 or 30 years, you’ll repay it in 10 years. This might make sense when buying a home if you can afford larger monthly payments, want to save big on interest payments and don’t want to spend decades carrying mortgage debt.
While 10-year mortgages aren’t that popular (90% of Americans opt for a 30-year fixed-rate mortgage), the homebuying process is the same whether you opt for a 10-year or 30-year mortgage. You should expect to pay the same fees, including closing costs and origination fees.
It’s important to speak with multiple lenders and do your research before choosing a home loan. Interviewing more than one lender will help you find the lowest rate and fees for your situation. The more lenders you gather information from, the better your chances of securing a lower rate.
Note: A 10-year fixed rate mortgage is not to be confused with a 10-year adjustable-rate mortgage. A 10-year ARM offers you a fixed, teaser rate for the first 10 years of your home loan. After that, your rate will adjust either once or twice a year for the remainder of your loan -- often 20 years.
10-year fixed-rate mortgage rate trends
Since the start of 2022, mortgage rates have consistently increased from the pandemic-era record lows of around 3%. As of mid-November, average rates for 10-year fixed mortgages are just above 7% -- that’s lower than the average rates for 30-year fixed mortgages, which are just below 8%.
The main reasons behind today’s elevated mortgage rates are inflation and the Federal Reserve’s efforts to bring it down by hiking interest rates. Experts aren’t anticipating any dramatic decreases in mortgage rates in the near future. Instead, mortgage rates are expected to slowly come down over the course of the next year or so, provided inflation declines enough so that the Fed is able to start cutting rates.
Current mortgage rates
|30-year fixed-rate FHA||6.41%||7.32%|
|30-year fixed-rate VA||6.57%||6.68%|
|30-year fixed-rate jumbo||7.53%||7.54%|
|15-year fixed-rate jumbo||6.68%||6.70%|
|5/1 ARM jumbo||6.72%||7.87%|
|7/1 ARM jumbo||6.99%||7.90%|
|30-year fixed-rate refinance||7.58%||7.59%|
|30-year fixed-rate FHA refinance||6.46%||7.39%|
|30-year fixed-rate VA refinance||6.57%||6.77%|
|30-year fixed-rate jumbo refinance||7.64%||7.65%|
|20-year fixed-rate refinance||7.40%||7.42%|
|15-year fixed-rate refinance||6.78%||6.80%|
|15-year fixed-rate jumbo refinance||6.78%||6.79%|
|5/1 ARM refinance||6.74%||7.81%|
|5/1 ARM jumbo refinance||6.84%||7.62%|
|7/1 ARM refinance||7.05%||7.99%|
|7/1 ARM jumbo refinance||6.90%||7.86%|
|10/1 ARM refinance||7.63%||8.06%|
We use information collected by Bankrate, which is owned by the same parent company as CNET, to track daily mortgage rate trends. The above table summarizes the average rates offered by lenders across the country.
Pros of a 10-year mortgage
- Lower interest rate: You pay a lower interest rate for a 10-year mortgage than other types of mortgages because the bank is taking less risk loaning you money over a shorter period.
- Pay off your loan faster: You save tens of thousands of dollars over the life of your loan by paying it off faster because you’ll cut down the total interest you pay overall.
- Faster path to equity: Because of larger monthly payments, you’ll own your home sooner than you would with longer mortgage terms.
Cons of a 10-year mortgage
- High monthly payments: Monthly payments can be two to three times higher than on a 30-year mortgage due to the shorter loan term. That might be too expensive for many people to afford.
- Harder to qualify: Since a 10-year mortgage comes with higher monthly payments than a loan spread out over more time, lenders will likely require you to have a higher income to show you can afford the payment.
- May limit your price range: A home that’s affordable with a 30-year mortgage may become prohibitively expensive with a 10-year mortgage. This is because the amount you can borrow is based on your debt-to-income ratio, or DTI, and the higher monthly payments that come with a 10-year loan will increase your DTI. Even with excellent credit, some homebuyers shopping in expensive markets may not have enough income to qualify for a 10-year loan.
- Reduced savings: If you’re allocating a larger portion of your monthly spending on a mortgage payment, it may curb your ability to pay off other debt and save money, which can be risky in the case of an emergency or if your financial situation changes.
Should you get a 10-year mortgage?
A 10-year mortgage is an excellent option for financing your home purchase if you want to pay as little interest as possible, but it’s not the best choice for everyone. For many potential homeowners, a 10-year home loan simply isn’t an affordable option.
A 10-year mortgage makes the most sense if you satisfy the following conditions:
- You can comfortably afford the larger payments
- You want to pay less interest over the life of your loan
- You want to pay your loan off faster and build your equity quickly
To get a good idea of what your monthly payment will look like with a 10-year mortgage, you can use CNET’s mortgage calculator.
How to get the best 10-year mortgage rate
Regardless of mortgage type, it’s important to take time to compare multiple loan offers from different lenders. That way you can compare their rates and fees side by side and negotiate the lowest interest rate for your situation.
Before you do that, make sure your application is in the best possible shape. Having an excellent credit score and paying down debts will give you a better chance at qualifying for the lowest rates.
You can take steps to improve your credit by making on-time payments and staying below your credit limit.
Alternatives to 10-year mortgages
A 10-year mortgage may make sense if you can afford a larger monthly expense with room in your budget to navigate any unexpected expenses. But it won’t make sense for everyone’s financial situation. Here are some alternatives:
- 30-year mortgage: A traditional 30-year mortgage lets homebuyers access financing for a more expensive home, spreading the monthly payments over three decades. While it takes longer to build equity, you’ll be able to get into a house on a budget you can afford.
- 15-year mortgage: A 15-year mortgage isn’t all that different from a 10-year mortgage, except you have five more years to pay it off. You’ll still benefit from a lower interest rate than a 30-year mortgage and pay less interest over the shorter term. If you can’t reasonably afford a 10-year mortgage, a 15-year mortgage may be a good compromise.
- Government-backed loan: If you don’t qualify for a 10-year mortgage, consider programs that helps first-time homebuyers or lower-income buyers purchase a home, such as an FHA loan, which can require a down payment as small as 3.5% for qualified participants, or a USDA loan, which will accept a credit score as low as 640.
How do you qualify for a 10-year mortgage?
Different types of mortgage have various eligibility criteria. In general, you’ll have a better chance of being approved if you meet the following requirements:
- Income: Because you pay off a 10-year mortgage much faster than a 30-year mortgage, you’ll have significantly larger monthly payments. As a result, you’ll need a higher income to qualify for the loan, though the specific amount will depend on the home price and size of your loan.
- Credit score: You’ll need a credit score of at least 620 to qualify for a conventional 10-year fixed mortgage. However, individual lenders may set their own, higher minimum credit score requirements.
- Down payment: A 20% down payment is widely recommended, but not necessarily required. Most lenders will require you to have a minimum down payment of just 3%.
- Other factors: Make sure you have all your financial documents like tax returns and pay stubs in order. Lenders will factor in every aspect of your financial life to determine whether or not to approve you for a loan.
Other mortgage tools and resources
You can use CNET’s mortgage calculator to help you determine how much house you can afford. CNET’s mortgage calculator takes into account things like your monthly income, expenses and debt payments to give you an idea of what you can manage financially. Your mortgage rate will depend in part on those income factors, as well as your credit score and the ZIP code where you are looking to buy a house