A 20-Year Mortgage Can Offer a Lower Rate
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A 20-year fixed mortgage can offer a lower rate and a shorter payoff than a 30-year. In FreeRateUpdate’s lender network, the best advertised 20-year fixed purchase rate we recorded on October 5 was 6.25%, half a point below the best 30-year at 6.75%.
That was the widest gap between the two since we began recording the 20-year on August 3. It was about three eighths of a point on September 1, when the best rates were 5.625% and 5.99%, and a quarter point on September 28. On October 5 those advertised rates, which aren’t quotes, had APRs of 6.514% on the 20-year and 6.917% on the 30-year.
| Date | 20-year | 30-year |
|---|---|---|
| September 1 | 5.625% | 5.99% |
| September 15 | 5.99% | 6.375% |
| September 19 | 5.99% | 6.25% |
| September 28 | 6.25% | 6.5% |
| October 1 | 6.375% | 6.75% |
| October 5 | 6.25% | 6.75% |
What the lower rate is worth
Take a $400,000 loan at the October 5 rates, for a buyer who qualifies with the lender, paid on schedule with no refinancing or extra payments. The 20-year’s principal and interest payment, before the points and other charges, is about $2,924 a month, against $2,594 on the 30-year.
That’s about $329 more a month, and the 20-year rate came with more points, 1.853 against 1.467. Its scheduled interest, though, comes to about $302,000 against $534,000 on the 30-year, about $232,000 less.
The best 15-year that day, at 5.875%, would cost about $3,348 a month on the same loan, so the 20-year’s step up from the 30-year is less than half as large.
Source: FreeRateUpdate As Low As rate history, best advertised rates in our lender network, recorded September 1 to October 5, 2026. Captured data: 20-year fixed · 30-year fixed · 15-year fixed, October 5.
