Should You Get a 15-Year VA Mortgage?

The 30-year mortgage is the most popular mortgage option.

But VA borrowers, looking to get a zero-down payment mortgage backed by the Department of Veterans Affairs, also have the option of a 15-year mortgage.

A 15-year mortgage often comes with lower rates but borrowers can expect to make a larger monthly payment.

Of course, the right loan term for you will depend on your unique financial situation. But here are some situations when a 15-year mortgage might be the better choice.

What are the advantages of a 15-year mortgage?

There are some distinct advantages for borrowers who choose a 15-year fixed-rate mortgage loan, including:

• Relatively lower interest rates
• Less interest paid over the life of the loan
• Total loan amount is paid off earlier

The advantages of getting a 15-year VA loan are pretty much the same as getting a 15-year conventional mortgage. Because VA borrowers are making larger monthly mortgage payments — and tracking to pay off the mortgage in half the time — a 15-year mortgage can mean significant savings over the life of the loan when compared to 30-year loan options.

For example, a borrower with a 30-year loan of $300,000 and an interest rate of 4% can expect to pay $215,000 in total interest. But a 15-year mortgage of $300,000, with a lower interest rate of 3.25%, would cost less than $80,000 in total interest.

15-year vs 30-year: Which is best for you?

Ultimately, your loan officer can help you select the VA home loan best suited to your financial needs and goals.

But, generally, shorter-term mortgages are best for borrowers who:

• Are retiring soon and looking to pay off debt beforehand
• Borrowers who have been making regular payments on a 30-year mortgage for some time, and want to refinance to a lower interest rate
• Borrowers who made large down payments and smaller total loan amounts

Thirty-year mortgages remain a good option for homebuyers who:

• Want to maximize their home buying power
• Borrowers concerned about meeting debt-to-income (DTI) requirements
• First-time homebuyers who may need disposable income available to pay for maintenance or repairs on their new home
• Create your own 15-year mortgage

For borrowers not sure they want to commit to a 15-year mortgage, there can be advantages to getting a 30-year mortgage and simply treating it like a shorter-term loan. By making extra payments — or paying more than the minimum each month — homeowners can build home equity and reduce debt faster, regardless of the type of loan.

In this case, if you need money for other purposes, or have an unexpected financial setback, you can simply drop back to the minimum 30-year loan amount.

Of course, be sure to confirm that your mortgage lender won’t charge a pre-payment penalty on your loan.

15-year VA loan FAQ

Can a VA loan be for 15 years?

Yes, 15-year VA loans are available to eligible VA borrowers.

Are there 20-year VA loans?

Yes, 20-year VA loans are available to eligible VA borrowers.

How much is the VA funding fee for a 15-year VA loan?

The VA funding fee is part of the closing costs for a VA loan, and the amount is typically between 0.5% and 3.3% of the total loan amount. The amount of the VA funding fee is determined by the size of the down payment, by the number of times the VA borrower has used the program, and by the type of loan — for example, a VA cash-out refinance is likely to carry a larger funding fee than a VA streamline refinance. However, the funding fee amount is not altered by the loan term and a 15-year loan will carry the same funding fee as an equivalent 30-year loan.

Bottom line: 15-year VA loans

The VA loan program is often the best choice for qualifying borrowers. Active-duty service members (including National Guard and Reserves), veterans, and surviving spouses may be able to save thousands on a home purchase, by taking advantage of the VA loan program benefits, including:

• No down payment requirement
• No private mortgage insurance (PMI)
• Competitive VA loan rates compared to FHA or conventional loans
• Flexible credit score requirements

Whether you are in the market for a purchase loan or a refinance loan, a VA lender can help you to request your Certificate of Eligibility (COE) to confirm your military service and VA loan eligibility, and get the VA home loan application process started.