Qualifying for a 15-year mortgage requires a strong financial profile. Lenders look for credit scores above 700, low DTI ratios (under 43%), and stable income. Higher down payments are preferred. If you can handle larger monthly payments, this loan offers faster equity and less total interest.
Want a 15-Year Fixed Mortgage? Here’s What It Takes
Qualifying for a 15-year mortgage is tough, but it isn’t impossible. If you’re tired of 30-year loans and want to own your home faster, you’ll need to prove you can handle the higher monthly payment. Lenders aren’t handing these loans out like candy. You need a strong credit score, solid income, and a low debt-to-income (DTI) ratio. The good news? If you get approved, you’ll pay less interest and build equity fast.
Is a 15-Year Fixed Mortgage Right for You?
Before applying, ask yourself:
- Can I comfortably afford the higher monthly payments?
- Does paying off my home faster align with my financial goals?
- Will I still have enough cash for savings and investments?
If your income is stable and you want to save on interest, a 15-year fixed mortgage could be a smart move. But if those larger payments would stretch you too thin, it might not be the best fit.
What Credit Score Do You Need?
Lenders want to see a credit score of at least 700 or higher. Some may approve you with a slightly lower score, but expect higher interest rates.
If your score isn’t where it needs to be, focus on:
- Paying bills on time
- Keeping credit card balances low
- Avoiding new debt before applying
How Much Debt Can You Have?
Your debt-to-income ratio (DTI) plays a huge role in approval. Most lenders prefer a DTI of 43% or lower—the lower, the better.
To calculate your DTI:
- Add up all your monthly debt payments (loans, credit cards, etc.).
- Divide that number by your gross monthly income.
- Multiply by 100 to get your percentage.
If your DTI is too high, paying off debts or increasing your income can improve your chances.
How Much Income Do You Need?
No magic number here—but higher is always better. Lenders want to see stable income with a solid employment history.
To strengthen your application:
- Show at least two years of steady employment.
- Avoid job-hopping before applying.
- Have tax returns ready if you’re self-employed.
The goal? Prove you have a reliable stream of income to make those higher payments.
How Big of a Down Payment Is Required?
Most 15-year loans require at least 10% down, though 20% is ideal to avoid private mortgage insurance (PMI). The more you put down, the better your loan terms.
If you’re struggling to save, consider:
- Cutting unnecessary expenses
- Exploring first-time homebuyer programs
- Picking up a side hustle for extra cash
FAQs
What are the benefits of a 15-year fixed mortgage?
Lower interest rates, faster equity buildup, and less money spent on interest over time.
Can I refinance to a 15-year mortgage?
Yes, but make sure you can handle the higher payments before committing.
How can I improve my chances of qualifying?
Boost your credit score, lower your debt, and increase your income.
What if I can’t afford the higher payment?
Consider a 20-year loan as a middle-ground option or stick with a 30-year loan and make extra payments.
Conclusion
Ultimately, securing a 15-year mortgage hinges on robust financial health. Qualifying for a 15-year mortgage demands a credit score above 700, a DTI under 43%, and consistent income. While challenging, the payoff is significant: rapid equity growth and minimized interest. Before committing, assess your ability to handle higher payments. If affordability is a concern, consider alternatives like a 20-year loan or extra payments on a 30-year mortgage.