30-Year Fixed-Rate Mortgage
Traditionally, the 30-year fixed mortgage is possibly the most popular mortgage loan on the market. It is characterized by an interest rate and monthly payment that remains the same over the life of the loan. For example, a 30-year mortgage with a fixed rate of 3.5% stays at that rate for the entire 30 years despite changes in real estate trends. Unlike adjustable-rate mortgages (ARMs), your payments remain predictable. You will pay more interest than principal in the early years, but this gradually reverses over time.
Requirements to Qualify
- Minimum down payment of 3%
- Minimum credit score of 620
- Debt-to-income ratio (DTI) under 50%
- Cash of 2%–6% to cover closing costs
Benefits
- Lowest monthly installments compared to other fixed-rate loans
- Flexibility to pay off the mortgage early without prepayment penalties
- Predictable payments allow better budgeting for other priorities
- Ability to qualify for a larger loan based on payment capacity
- Avoid mortgage insurance with 20% down payment
- Refinance up to 97% of your home’s value if rates drop
- Low down payment option of 3% for primary homes
Cons
- Higher interest rates than 15-year mortgages
- Pay significantly more interest over the life of the loan
- Slow equity build-up in the first 10 years
- Not ideal if planning to sell the home within a few years
Expert Help
If you have any questions about the 30-year mortgage, consult our experts at 408-242-0283.