Compare current 10-year mortgage rates
A shorter repayment period means rates are often lower than with a 30-year loan, though your monthly payment likely will be higher.
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Mary Beth Eastman is a Credible authority on personal finance. Her work has been featured by The Balance, Money Under 30, and more.
Updated August 1, 2024, 11:32 AM EDT
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What are 10-year mortgage rates?
If you’re shopping for a home, you’ll want to find the most affordable option for you — especially given that the median sale price of a home in June 2024 was above $417,000, according to data from the U.S. Census Bureau. One option is a 10-year mortgage, which lets you borrow money to buy or refinance a home and repay it (with interest) over 10 years. In general, 10-year mortgage rates tend to rise and fall in line with other interest rates. However, not every mortgage lender offers 10-year mortgages, so if this loan type interests you, you may need to shop around to find one.
How do 10-year mortgage rates compare to other mortgage terms?
Overall, 10-year mortgage rates tend to be lower than 15-year and 30-year mortgage rates. That’s because longer loan terms mean more risk for the lender, so they charge higher interest to compensate. Shorter loan terms — like 10 years — reduce the risk for lenders because the loan is repaid more quickly.
“There is less time for economic conditions to change” with a 10-year mortgage, said Kelly Miskunas, senior director of capital markets at Better.com, a mortgage lending company.
The highest rates are found with 30-year mortgages, she said. “The longer term increases the lender's risk and exposure to potential changes in the borrower's financial situation or the broader economy over the life of the loan,” Miskunas said.
Less interest
The longer the mortgage term, the more you’ll pay in interest, because you’re paying interest on the loan for more years. A 10-year mortgage could save you money in interest over the life of the loan not only because the rates are often lower but also because your repayment period is shorter.
The table below illustrates what you can expect to pay for a $300,000 loan over 10, 15, and 30 years, as well as how interest rates might vary based on loan term:
Mortgage rate predictions
Overall, mortgage rates have risen sharply since hitting historic lows below 3% in 2020. For 30-year mortgages, rates averaged around 7% in 2024, according to the Federal Reserve Bank of St. Louis.
At their July 2024 meeting, Federal Reserve policymakers voted to hold the federal funds rate steady at 5.25% to 5.50%, but indicated that a cut to interest rates could happen in September if inflation continues to ease.
Phil Crescenzo Jr., vice president, southeast division at Nation One Mortgage Corporation, predicts interest rates will continue to drop in the long term.
"Interest rates over the next one to five years are expected to trend down,” he said. “There will be a leveling and gradual improvement as the markets stabilize and consumers should start to see some relief," he said.
However, not all buyers can afford to wait between one and five years to buy a home with a lower interest rate. For some, 10-year mortgages may be the best way to buy a house in 2024.
Factors affecting 10-year mortgage rates
Several factors affect 10-year mortgage rates; some are economic, while others are personal to your situation. Here are some of the biggest influences on rates for 10-year mortgages:
- Federal Reserve actions: The Federal Reserve sets the target rate for federal funds as part of its mission to keep the economy growing at a slow, steady pace. When the Fed hikes the fed funds rate, other interest rates tend to follow suit.
- Economic conditions: When the economy is shrinking, or in a recession, interest rates are lower to encourage spending. When the economy is booming, rates tend to rise instead.
- Credit score: Your credit score greatly impacts the interest rate a lender will offer you, with lenders typically offering their lowest rates to borrowers with the highest credit scores. You may not be able to find low rates on a 10-year mortgage with bad credit.
- Down payment: The amount you can put down on the home will affect mortgage rates; if you put down less than 20%, you’ll typically have to pay private mortgage insurance (PMI). Your income, assets, and debts also influence what a lender decides to charge as it determines your ability to repay the loan.
- Property: The location of the property can also affect the mortgage rate you may qualify for, with rates varying by state.
Pros and cons of a 10-year mortgage
Choosing a 10-year mortgage has its advantages and disadvantages.
"The pros are the reduced interest based on a much shorter pay-off timeline,” Crescenzo said. “However, cutting that many years off of a traditional mortgage loan can also increase payments significantly."
A 10-year mortgage can be a good choice for some people with high income who can handle the higher monthly payments, Miskunas said. It might also be a good fit if your primary goal is to pay off your home quickly and save on interest, so long as you plan to stay in the home long enough to reap the benefits of paying off the mortgage early.
“However, if you need more financial flexibility or expect significant changes in your financial situation, a longer-term mortgage might be more suitable,” she said.
Pros
- Lower rates: Shorter repayment terms usually mean lower interest rates.
- Less interest: Because you’re repaying the loan over a shorter period of time, you’ll usually pay less interest overall with a 10-year mortgage, even if the rate is the same.
- Faster equity: You’ll pay off the home in 10 years, giving you equity faster than if you paid it off in 15 or 30 years.
Cons
- Bigger monthly payments: Compressing the repayment period into 10 years instead of 15, 20, or 30 years means your monthly payments will need to be bigger.
- Less flexibility: Bigger payments can tie up your cash flow, leaving you with less money each month to spend, save, or invest.
- Stricter requirements: You may need a higher income to qualify for a 10-year mortgage since the monthly payments will be higher than with a 30-year loan.
Tips for securing the best 10-year mortgage rate
Finding the lowest 10-year mortgage rate involves many of the same steps as finding the best rate on other mortgage terms. To get the best rates, try improving your borrower profile and shopping around with multiple lenders. Here are some tips:
- Improve your credit: Raising your credit score can show lenders that you are a responsible borrower and help you qualify for low rates.
- Comparison shop: Compare quotes from several lenders — including banks, credit unions, and online lenders — to see who offers the best deal. Remember to consider fees and closing costs, too.
- Boost your down payment: Saving funds for a bigger down payment can help you score a lower interest rate because it can lower the loan amount compared to the home’s value (the loan-to-value ratio).
- Reduce your debt: Paying down your other debts can not only help improve your credit score over time, but it can also help improve your debt-to-income ratio (DTI), which is one of the factors lenders consider when determining the rate to offer.
- Lock in your rate: Since mortgage rates tend to fluctuate, you can avoid overpaying by locking in your rate (so your interest rate won’t change) before you close on your loan.
Keep in mind:
It can be more difficult to find 10-year mortgages than it is to find 15- or 30-year mortgages, which means you might have fewer options to compare when shopping.
10-year mortgage rates FAQ
Can I refinance to a 10-year mortgage?
You can refinance your current home loan to a 10-year mortgage. You’ll need to shop around for a lender that offers a 10-year term for refinances. If you’re refinancing a mortgage with more than 10 years left on the loan, be prepared for higher monthly payments due to a compressed timeline.
How does my credit score affect my mortgage rate?
The higher your credit score, the more likely you are to receive lower interest rates. Lenders often reserve their lowest rates for buyers with good credit (mid-700s or higher) and a proven record of paying their debts on time.
Are there any prepayment penalties for 10-year mortgages?
It’s possible that a 10-year mortgage could have a prepayment penalty if it fits federal criteria. For prepayment penalties to be allowed, it must be a qualified, fixed-rate loan repaid in the first three years. Your loan documents should state whether the mortgage has a prepayment penalty, or you can contact your loan servicer to find out.