What Is a 20-Year Fixed Mortgage?

In this article:

• What is a 20-Year Fixed Mortgage Rate?
• Advantages
• Disadvantages
• How to Get the Best Rate
• Current 20-Year Fixed Rates

What is a 20-Year Fixed Mortgage?

A 20-year fixed rate mortgage is a home loan with an interest rate that remains the same throughout the 20-year duration of the loan. The borrower will be required to repay the principal and interest on the loan throughout the course of 20 years. Note that while the payments will be the same amount for 20 years, in the initial years, a higher part of the payment goes towards interest payments rather than towards the principal.

Advantages

The 20-year fixed rate mortgage has a fixed interest rate, which has advantages over an adjustable interest rate. For one, the rate never changes so you always know what your monthly mortgage payments will be; an adjustable rate mortgage goes up and down depending on the loan terms and market interest rates. While the initial interest rate for an ARM is typically much lower than with a fixed-rate loan, in today’s low-interest rate environment, the spread between the initial rate of an ARM and a fixed-rate isn’t that pronounced.

The two most common types of mortgages are the 15-year fixed mortgage and the 30-year fixed mortgage. The 20-year mortgage has several advantages over the 30-year mortgage. For one, because the term of the loan is 20 years vs. 30 years, the borrower will likely pay far less in interest over the life of the loan than with a 30-year loan. Plus, interest rates on 20-year loans tend to be lower than for interest rates on 30-year loans, and you’ll be out of debt 10 years faster with a shorter loan. When compared to 15-year mortgage loans, the monthly payments on a 20-year mortgage loan tend to be lower because the term is longer.

Disadvantages

Since the rates on ARMs are usually initially lower than fixed-rate loans and if you’re planning to sell your home in a few years, it may make sense to go with an ARM vs. a fixed-rate loan. When deciding on the term of your loan, consider that a 5-, 10- or 15-year term will likely save you money in the long term because you’ll be paying less in interest, and you’ll get out of debt faster with one of these loans than with a 20-year loan. But if you’re strapped for cash from month to month, it may make sense to do a 30-year mortgage vs. a 20-year mortgage because the monthly payments will be lower.

Check today’s mortgage rates on Zillow

How to Get the Best Rate

To get the best rate on a 20-year fixed rate loan, you should shop around for rates, keep track of mortgage rate trends, and talk to multiple lenders. You can compare multiple quotes from lenders on Zillow, anonymously. Remember that when comparing different loan offers, you should look not only at the interest rate, but also the closing costs and other fees.

A higher credit score and higher down payment can also help you get a lower rate. Lenders will look at your credit score and ask for past tax returns, pay stubs, proof of assets, list of debts and other financial documents, which they will use to determine your ability to repay.

Current 20-Year Fixed Rates

Below are today’s average 20-year fixed interest rates. You can also use Zillow to get customized interest rates for your particular situation. Enter your loan details and you'll get free quotes from multiple lenders, anonymously.

Next: Shop for 20-year fixed mortgage rates on Zillow.