Current 20-Year Mortgage Trends
Updated January 22, 2021
- 20-Year Fixed Rate 2.760%; APR of 3.060%.
We’ve all heard about 30-year and 15-year mortgages, but did you know that there are other types of mortgages? While not always publicly posted, many banks and credit unions offer 20-year mortgages for home purchases.
These conventional mortgage options offer a “sweet spot” between the shorter and more aggressive 15-year mortgage terms and the longer and more conservative 30-year mortgage. Depending on your financial situation, you could see long-term and short-term benefits from the best 20-year mortgage rates.
What are the benefits of a 20-year fixed mortgage rate?
The 20-year mortgage can be a great option for home buyers because it’s the sweet spot between 15-year and 30-year mortgages. It decreases the higher payment amounts you’d have to make with a 15-year mortgage, but also shaves 10 years off the length of the 30-year mortgage.
When borrowers look at their fixed mortgage options, any mortgage that has a term shorter than 30 years is going to be less expensive since it is paid off sooner and accrues less interest over the life of the loan.
Still, while a 10- or 15-year mortgage offers the shortest payoff and lowest interest charges, many borrowers shy away from the large monthly payments that come with these mortgage terms. They can be a good fit if you can afford them, but coming up with the higher monthly mortgage payments can be tough to do.
A 20-year mortgage still cuts 10 years from the 30-year mortgage term and knocks out a good deal of the interest charges as well, but it is far more manageable on a month-to-month basis than the shorter 10 and 15-year mortgages.
What are the downsides of a 20-year fixed mortgage rate?
The downsides of the 20-year mortgage depend on whether you compare it with the shorter 10 and 15-year mortgages or the longer 30-year mortgage.
When compared with the shorter term mortgages, the obvious disadvantage to a 20-year loan is the higher total interest costs.
When compared with the 30-year mortgages, there are actually a few more disadvantages to weigh. These include the risk that the higher monthly payment will strain your budget, which could put you at risk of foreclosure if you start missing payments.
You also need to consider the fact that you’ll be limited in the amount of money you can save or invest due to the larger monthly payments.
Fees associated with a 20-year fixed mortgage
There are no fees or costs that are specific to a 20-year mortgage loan, but there are normal fees that come with taking out a mortgage.
With that in mind, you can expect to pay roughly 2% to 5% of the principal amount of the loan on average in fees and costs at closing. Those include the usual origination fees, appraisals, inspection fees, and other third-party costs.
8 best 20-year mortgage lenders of 2020
- BBVA: Best for jumbo loans
- Bank of America: Best for transparency
- Better.com: Best for quick rate comparisons
- US Bank: Best for contact options
- Washington Federal Bank: Best for 20-year lot loans
- Loan Depot: Best for no lender fees
- Niagara Regional Federal Credit Union: Best for residents in the state of New York
- Wells Fargo: Best for loan options
BBVA — Best for jumbo loans
APR rates on 20-year mortgages at BBVA start at 2.999% for conventional loans and 3.269% for jumbo loans. Unlike some lenders on this list, BBVA limits service to 10 states serviced by 649 branch locations. BBVA stands out above many other lenders thanks to the educational resources they have available for newer buyers. This lender’s Mortgage 101 customer resource guide works through some of the most common FAQs concerning all different types of mortgages and available options.
Bank of America — Best for transparency
Rates on 20-year mortgages at Bank of America are a little higher than the industry average, starting at roughly between 3.117% APR, depending on your loan size, location and credit profile. This lender delivers impressive transparency throughout the entire process with the Home Loan Navigator. This technology lets you track your loan, sign and submit documents digitally and can be accessed through your Bank of America online banking portal.
Better.com — Best for quick rate comparisons
Rates on 20-year mortgages can be found at Better.com instantly and are updated 24/7. Currently, the APR depending on your loan factors, location and credit score are about 2.794% or so. For those who are not sure what type of loan they want yet, Better.com allows you to compare rates across seven different types of loans — including 20-year loans — all at once.
U.S. Bank — Best for low rates
Current 20-year fixed rates at US Bank start at about 3.086% APR for conventional loans. For jumbo loans, APRs start at 3.472%. Compared to several of the other lenders on this list, these rates are a bit higher. What is convenient about U.S. Bank, though, is that you can request a call, call yourself, search for a loan officer, fill out an application online or obtain a loan estimate online. The flexibility of ways to get information on what you can be approved for is impressive.
Washington Federal Bank — Best for 20-year lot loans
While Washington Federal Bank does not publicly advertise 20-year fixed mortgage loans for homes, the company does advertise 20-year fixed lot loans. Future homeowners looking to build may be required to purchase the plot of land where their future home is going to go, and this option may work well for them.
Washington Federal Bank provides a loan product to facilitate this with an interest rate of 5.875%, an APR of 6.143% and an additional fee of 1%. Additionally, the company has construction loan products available for those looking to build.
Loan Depot — Best for no lender fees
Loan Depot requires prospective lenders to contact a customer service agent to get personalized rates, but this lender does offer 20-year mortgages, so it may be worth looking into, even with the extra required step. While this is not ideal for quick comparison, what does stand out about Loan Depot is the company’s industry experience and future no lender fee guarantee.
The company has written over $165 billion in loans. Additionally, if you buy a home through the company, you’ll never pay lender fees again should you refinance through Loan Depot.
Niagara Regional Federal Credit Union — Best for buyers in the state of New York
Banks and lenders don’t get to have all the fun. Credit unions can also be great sources for 20-year mortgages. Niagara Regional Federal Credit Union has 20-year rates currently at 3.134% APR with no points.
While the rates are attractive, the service area of the bank is very small, limited to the state of New York. However, residents of the state of NY should consider these attractive rates from NRFCU. Additionally, the bank works with other credit unions to offer services and account access in other areas than the two main branches.
Wells Fargo — Best for loan options
The current rates on 20-year fixed-rate mortgages at Wells Fargo are 2.782% APR, which makes the rates from this lender considerably higher than other available options.
Borrowers who are not set on a 20-year fixed may want to check out Wells Fargo. Publicly, the bank advertises ten different types of purchase loans. A loan agent from Wells Fargo can sit down with you and discuss the merits of a 20-year mortgage as well as the other available options.
Compare 8 best 20-year mortgage rates of 2020
|Provider||States Serviced||Branch Locations||Key Benefit|
|BBVA||10||649||Rates starting at 2.999% APR|
|Bank of America||50||4,600||Rates starting at 3.117% APR|
|Better.com||44||8||Rates starting at 2.794% APR|
|U.S. Bank||26||2,729||Rates starting at 3.086% APR|
|Washington Federal Bank||8||230||Unique construction and lot loans|
|Loan Depot||50||218||Loan Depot lifetime guarantee|
|Niagara Regional Federal Credit Union||1||2||Access account from shared branches|
|Wells Fargo||50||Yes — 7,300||Rates starting at 2.782% APR|
What is a 20-year mortgage?
A mortgage is a loan that is taken out to purchase a house or property. The loan is paid back over a certain period of time with agreed upon terms and interest paid to the lender for issuing the loan. Generally, these loans are taken out through a bank, credit union or another financial lender, though peer-to-peer loan options are sometimes available through a private individual.
A 20-year mortgage is simply a type of mortgage loan that is repaid back with fixed payments over the course of a 20 year period. Loan repayments include interest charges and may include fees charged by the lender for issuing the loan.
20-year mortgage vs. other terms
Compare all mortgage products on our mortgage rates page to get a more holistic view.
20-year mortgage vs. 30-year mortgage
For home buyers looking to take a slightly more aggressive approach to paying off their mortgage — but who aren’t ready to commit to a 15- or 10-year option — a 20-year mortgage may be the right choice. Payments will be slightly higher each month, but you’ll cut 10 years off your loan repayment period, which spells extensive interest savings over the long haul.
Still, while you may save money on the interest with this type of loan, the higher monthly payments that come with a 20-year mortgage may limit the size of the loan you can be approved for.
20-year mortgage vs. 10-year mortgage
Much like 20-year mortgages, 10-year mortgage rates are rarely publicly posted, though many banks do offer this type of loan with a short repayment period. The 10-year mortgage loan options have some of the most aggressive repayment plans available, which is what you need if you’re getting your entire house paid off in a single decade. This option is ideal for those who purchase a house well below what they can afford, as the larger payments will still be manageable.
20-year mortgage vs. 15-year mortgage
15-year mortgages are far more frequently offered by banks and lenders than 20-year mortgages. Some financial professionals advise buyers who can afford the higher payments to utilize a 15-year mortgage instead of a 30-year option. If the payments are too high, however, you can always find the sweet spot in the middle at 20 years.