The Average Mortgage Length In The U.S. (2024)

A mortgage loan establishes the specific length of time a borrower has to repay a loan. This time frame is known as the mortgage term. The most common mortgage term in the U.S. is 30 years.

However, most homeowners won’t keep their original loan for 30 years. Many either refinance the loan or move out before the mortgage term is up. The average mortgage length is about 10 years, according to a 2023 report on buyer and seller generational trends from the National Association of REALTORS^® (NAR). Most buyers reported planning to stay in their homes for around 10 years. Millennial buyers said they only planned on staying for 4 years.

The 30-year loan is America’s most popular mortgage term due to several factors, including bb-and their financial goals.

Mortgage Length Options

There are two main types of mortgage interest rate structures: a fixed-rate mortgage and an adjustable-rate mortgage (ARM). When you compare fixed-rate mortgages to ARMs, you’ll see that the interest rates on fixed-rate mortgages stay the same over the life of the loan, while the interest rates on ARMs can fluctuate over the loan’s term.

ARMs are usually only 30-year loans, while fixed-rate loans offer several term options.

Most fixed-rate mortgages have a 30-year or 15-year term, though some lenders offer 20-year terms. Some lenders even allow borrowers to choose their loan term. Home buyers should consider all home loan options before committing to a mortgage.

Let’s dive deeper into these loan products to learn more about each.

15-Year Mortgage

Some home buyers opt for a 15-year mortgage for one primary reason: total interest paid. A borrower can pay off a loan with a shorter mortgage term faster. They pay less in total interest because they’re paying interest on a loan for half the time compared to a 30-year home loan. Other benefits homeowners can enjoy from paying a loan off faster include building equity quicker and owning their home free and clear much sooner.

While a 15-year mortgage has advantages, many homeowners shy away from this loan. While it can save borrowers a lot of money in the long run, they must make higher monthly mortgage payments upfront.

30-Year Mortgage

The 30-year mortgage is the most common home loan term in the U.S. Whether it has a fixed or adjustable interest rate, it gives borrowers 30 years to pay the loan off.

Because the payment gets spread out over 30 years, this mortgage generally offers the lowest monthly payments. However, making mortgage payments over 30 years typically means paying more in total interest.

20-Year Mortgage

For borrowers who don’t want to commit to a 30-year mortgage but don’t want to pay the higher monthly payment on a 15-year mortgage, a 20-year mortgage may be a good compromise. While a conventional loan is a standard option for 20-year mortgages, the Department of Veterans Affairs (VA) and Federal Housing Administration (FHA) have 20-year loans available.

A 20-year loan term offers a solid middle ground when comparing 15-year and 30-year mortgage terms. But how do you decide between a 20-year and a 30-year mortgage?

Consider the difference in interest rates. 20-year mortgages have lower interest rates than 30-year mortgages and can help you save on total interest paid over time. However, you won’t save as much in interest as you would with a 15-year loan. Compared to 15-year mortgages, 20-year mortgages have lower monthly payments, providing greater financial flexibility. However, their monthly payments are still higher than 30-year loan monthly payments.

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YOURgage®

Rocket Mortgage^® has a loan option called YOURgage. This home loan option allows you to choose a fixed-rate term that ranges from 8 – 29 years. With a YOURgage, borrowers can tailor the mortgage length to their financial goals, and it grants some control over their monthly payment amount.

Shorter Vs. Longer Mortgage Terms

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

Longer Mortgage Terms

Longer mortgage terms generally have higher interest rates, which translates to a higher amount of interest paid over the length of the loan. While longer mortgage terms cost more in interest, borrowers benefit from lower monthly payments.

30-year loans are a popular type of mortgage, especially for first-time home buyers. Repayment happens over three decades, so they pay less each month.

Several factors determine the interest rate a borrower pays. And you can use different techniques to lower your interest rate. If your lender offers it, one way to lower your rate is through a mortgage buydown, which allows you to pay more at closing to buy down your interest rate.

Shorter Mortgage Terms

Because homeowners with 15- or 20-year mortgages have less time to repay the loan, they can expect to make higher monthly payments than homeowners with longer-term loans. 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. Below, we’ve included an example that shows the differences between 15- and 30-year mortgages.

At A Glance: 15-Year Vs. 30-Year Term Length

*To simplify the example, we used the same interest rate for both loans, but 15-year loans generally have lower interest rates.

With a 30-year mortgage, you’d save around $500 on your monthly payment. And with a 15-year mortgage, you’d save around $141,490 in total interest.

If you’re wondering how much your monthly payment would be with a different loan term, wonder no more. Plug your numbers into our mortgage calculator to compare payment amounts across different 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.

Is The Most Popular Mortgage Term Right For You?

Keep your budget and long-term financial goals in mind as you decide which term is the right mortgage term for you. Consider your answers to the following questions to help you make an informed decision.

Are You Planning To Buy A Large Home?

Because monthly payments are lower with a 30-year mortgage, you may be able to afford more house with the long-term loan. If you purchase a large or luxury home, a 30-year mortgage may be a suitable 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 associated with a 30-year mortgage. The money you’ll save with a lower monthly payment can go toward savings or paying off debts.

Using the example in the table, if you opted for a 30-year loan instead of a 15-year loan, you could use the roughly $508 you’d save on your monthly payment to pay off other debts or build your savings.

Are You Prepared To Commit To Long-Term Debt?

While many homeowners hang on to their original mortgage for around 4 – 10 years before refinancing or selling it, some homeowners keep their original mortgage for the long term, in this case, the longest term: a 30-year mortgage. Ask yourself how comfortable you would be with this long-term commitment. While you may be able to pay down the mortgage early, some lenders charge prepayment fees. Before committing to long-term debt, ask your lender about prepayment penalties. If you can pay the loan off early, draft a plan that helps you achieve your goal.

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, you’ll likely pay the most in total interest if you keep the loan for 30 years. When choosing your mortgage term, consider your financial goals and monthly budget. Then, talk to a mortgage expert to get the best mortgage rate possible.

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