Current 10-Year Mortgage Rates for 2021

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What is a 10-year mortgage?

A 10-year mortgage is a home loan paid in fixed installments on a 10-year payoff schedule. Borrowers typically choose a 10-year term to pay off their mortgage more quickly and save on interest payments.

How are 10-year rates set?

In general, seven main factors affect your interest rate:
  1. Your credit score. A higher score typically equals a lower rate.
  2. Your down payment. A higher down payment usually means a lower rate.
  3. Your loan amount. Lower loan amounts often come with higher rates.
  4. Your home’s location. Lender rates vary based on the state you live in.
  5. Your occupancy plans. You’ll pay a lower rate, in most cases, for a home used as your primary residence.
  6. Your ability to pay mortgage points. If you have extra money to pay mortgage points, you could lower your rate.
  7. The economy. A strong or weak economy, Federal Reserve policies, inflation expectations and bond yields may impact the rate you’re offered

Are 10-year mortgage rates going down?

Mortgage rates have gradually risen in 2021, but are still lower than they were in March 2020. 

The benchmark for tracking the movement of interest rates is 30-year, fixed-rate mortgages, and 10-year fixed rates usually follow their movement up and down. 

Although rising rates may make refinancing less appealing, rates will stay low enough to make buying worthwhile, according to Tendayi Kapfidze, chief economist for LendingTree. 

Pros and cons of a 10-year loan

  • Rates are typically lower than 30-year and 15-year fixed rates
  • You’ll have a mortgage-free home faster than longer terms
  • You’ll save on long-term interest charges
  • Your monthly payment will be much higher than a 30-year term
  • Your tax benefit may be reduced because you pay less interest
  • Your payment could become unaffordable if you have a sudden drop in income or increase in expenses.

How to get a 10-year mortgage

You’ll typically take the following four steps to get a 10-year mortgage:
  1. Shop different lenders. Not all lenders may offer 10-year fixed loans, so you may need to try online comparison sites, call mortgage banks and mortgage brokers in your area or check with your local lender
  2. Gather your paperwork. Once you’ve reviewed loan estimates and picked the best deal, have your paystubs, W-2 forms and bank statements handy in case the lender needs them.
  3. Lock your rate. Ask for a rate lock to protect your rate from any potential changes before your closing.
  4. Provide documents as needed. Look out for additional documentation requests. Lenders typically order an appraisal to verify your home’s value and a title search for any claims against your home.
  5. Review the figures and close. You’ll receive a closing disclosure three business days before closing. If the numbers look good, sign your closing papers, and you’re all done.

What’s the difference between a 10 - and 30-year fixed-rate mortgage?

The biggest differences between a 10- and 30-year fixed-rate mortgage are the monthly payment, interest rate, lifetime interest charges and how much income you’ll need to qualify. 

The table below highlights the differences between a 10-year, 15-year, and 30-year fixed-rate loan based on a $250,000 loan balance. 

Loan TermInterest rateMonthly payment*Total lifetime interest paidMonthly income needed to qualify
30 years3.75%$1,157.79$166,804.03$2,692.53
15 years3.25%$1,756.67$66,200.95$4,085.28
10 years2.75%$2,385.28$36,233.09$5,547.16

*Principal and interest payment only

Key takeaways versus a 30-year mortgage:

      • You’ll make the highest monthly payment with a 10-year fixed mortgage
      • You’ll have the lowest interest rate with a 10-year, fixed-rate mortgage
      • You’ll need nearly twice as much income to qualify for a 10-year fixed mortgage*
      • You’ll pay the least interest over the life of a 10-year fixed mortgage

*Important qualifying difference

You’ll need more income to qualify for a 10-year, fixed-rate mortgage to meet the standard 43% debt-to-income (DTI) ratio requirement most lenders require. Your DTI ratio is calculated by dividing your total debt (including your mortgage payment) by your gross income.

Fixed loan vs. ARM loan

Mortgage websites may advertise a 10-year ARM and a 10-year fixed rate. However, they aren’t the same. ARM is short for adjustable-rate mortgage, and there are important differences between a 10-year ARM and a 10-year fixed mortgage.

10-year fixed-rate features10-year ARM features
Fixed rate for the life of the loanRate is fixed at a lower “teaser” rate for 10 years, adjusts based on the terms of the ARM plan
Payment is based on a 10-year amortization Payment is based on a 30-year amortization
Shorter term = higher monthly paymentLonger term = lower monthly payment
Shorter term = lower lifetime interest chargesLonger term = higher lifetime interest charges
Shorter term usually = lower rateLonger term typically = higher rate

FAQs about 10-year mortgages

Try an online comparison rate tool, call local mortgage companies or contact a bank or credit union in your area.

 If you can afford the higher payment and want to be mortgage-free in the shortest time possible, a 10-year, fixed-rate loan probably makes sense.

 The best mortgage for you leaves enough room in your budget for other expenses, as well as savings and retirement goals.