30-Year vs. 10-Year Mortgages

September 20, 2011 8 Comments »
30-Year vs. 10-Year Mortgages

It’s time for another mortgage match-up folks. Today, we’ll look at 30-year vs. 10-year mortgages to see how they stack up.

Before we get started, it’s important to note that there are two very different types of 10-year mortgages out there.

There are 10-year fixed mortgages, which have a mortgage term of 10 years. And there are 10-year adjustable-rate mortgages, which have a term of 30 years.

The first type of mortgage is pretty straightforward. It’s similar to a 30-year or 15-year fixed mortgage, just shorter.

What this means, if you happen to be brave enough to go with the loan program, is that your mortgage payment will be quite high.

After all, if you only get 10 years to pay off your entire mortgage balance, you’ll need to come up with some sizable payments to get it down to zero in a hurry.

However, doing so will save you a ton in interest.

The “other” 10-year mortgage you’ll see out there is the 10/1 ARM, which is fixed for the first 10 years, and adjustable for the remaining 20.

This makes it a hybrid ARM because of its fixed/adjustable nature. It also means the loan payments have the ability to adjust both higher and lower once those 10 years are up.

So, are either programs a better choice than the classic 30-year fixed? Let’s see.

10-Year Fixed Mortgages

If you’re really, really serious about paying off your mortgage fast, this option could be for you.

Just note that your mortgage payment will be huge relative to other, more traditional options.

For example, on a $250,000 loan amount, a 10-year fixed with an interest rate of 3% would come with a monthly mortgage payment of $2414.02.

Compare that to a monthly payment of $1787.21 on a 15-year fixed at 3.5%, and a payment of $1193.54 on a 30-year fixed at 4%.

While the payment on the 10-year fixed is significantly higher, you’d only pay roughly $40,000 in interest over those 10 years.

On the 15-year, you’d pay about $72,000, and on the 30-year, you’d pay nearly $180,000 in interest.

So that right there is why someone would opt for the shorter term. A lower mortgage rate and much less interest paid.

But it only makes sense if you really want to pay off your mortgage fast, and have the means to do it without breaking the bank.

Tip: The difference in rate between a 15-year fixed and 10-year fixed may be marginal or even insignificant, so taking the longer term could provide you with some much needed breathing room.

10-Year ARMs

Here’s where things get misleading. Many mortgage companies advertise 10-year ARMs as if they’re fixed mortgages.

They basically use that initial 10-year fixed period to their advantage when putting together marketing materials.

And mortgage lenders can make 10-year ARMs appear really attractive by touting the low mortgage rates that accompany them.

After all, an ARM will always be priced lower than a 30-year fixed mortgage.

Per Bankrate, the 10-year ARM averaged 3.76 percent last week, while the popular 30-year fixed hit a record low 4.32 percent.

So you can see why a customer may think the 10-year ARM is the better choice.

But the fact of the matter is that these loans are still adjustable-rate mortgages in fixed-rate clothing.

Put simply, if you’re not comfortable with a loan program that may adjust, steer clear.

However, if you plan to move within 10 years (or refinance somehow), going with a 10-year ARM will provide you with a fixed rate for a significant period of time while you figure things out.

Just be sure you know which 10-year mortgage you’re actually getting…

Read more: 30-year vs. ARM


  1. Stormy June 25, 2013 at 8:21 am -

    Thanks for pointing out the difference between a 10-year fixed and a 10-year ARM. I certainly wouldn’t want a 10-year fixed, the payments would be much too large. But the 10-year ARM could be a good fit, seeing that I may sell my home well before that.

  2. Rod Jones November 2, 2013 at 3:16 am -

    I’ve been seeing a lot of commercials and advertisements for the 10-year fixed mortgage lately. I think it’s a sales gimmick to advertise a lower rate. But people don’t realize the monthly payment is much, much higher because of the shorter term.

  3. Colin Robertson November 3, 2013 at 12:11 pm -

    Yep…I’ve seen the same. I think Greenlight and CashCall both have been advertising 10-year fixed loans as an alternative to the 15-year and 30-year because the rate is cheaper. They don’t mention anything about the payment, which most people probably can’t even qualify for. And not everyone wants to pay off their mortgage in a decade, despite it sounding nice.

  4. Molly November 7, 2013 at 6:51 am -

    I’ve been seeing a ton of ads on TV for the 10-year fixed. It sounds like a great low rate until you realize you have to pay off your mortgage in full in a decade…

  5. Allison January 17, 2014 at 10:20 am -

    My lender tried telling me I was getting a 10-year fixed loan, but in reality it’s an adjustable-rate mortgage that will reset higher in 10 years. False advertising! Hello!!

  6. Colin Robertson January 20, 2014 at 9:24 pm -

    Yep, this is a pretty common tactic nowadays. It is true that a 10/1 ARM is fixed for the first 10 years, but that only tells you a third of the story. Those other 20 years on the 30-year loan need to be mentioned as well.

  7. Jeff February 2, 2015 at 4:54 pm -

    10 year Fixed….perfect way for a 50-something to pay off the house and enter retirement …Debt Free!!!!

  8. Colin Robertson February 3, 2015 at 10:52 am -


    Interesting angle and very true for someone even getting a late start.

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