The full explanation
On the Loan Estimate it appears as "Loan Term," in years or months. The term changes your monthly payment: if you refinance and your payment goes down, part of that drop may come from a longer term rather than a lower rate. A Qualified Mortgage (QM) cannot have a term longer than 30 years.
An example
Sandra tries the calculator with different terms. Before applying for her loan, she sees how her monthly payment changes with each one.
With real numbers
Computed with official data for the whole U.S. In your county the numbers may differ.
- Per month over 30 years (7.18%)
- $1,803
- Per month over 15 years (6.57%)
- $2,329
- Less interest with the shorter term
- $229,919
With a $266,160 loan (a $332,700 home with 20% down) and the average rates of November 5, 2026: over 30 years at 7.18%, you would pay $1,803 a month and $382,942 in interest. Over 15 years at 6.57%, the payment rises to $2,329, but interest drops to $153,023.
Computed with: American Community Survey (ACS) 5-year estimates (2020–2024) · Freddie Mac Primary Mortgage Market Survey (PMMS) (November 5, 2026) · Fannie Mae Selling Guide B7-1-01 — Provision of Mortgage Insurance (October 17, 2026)
You will see it in…
- The Loan Estimate, page 1 (“Loan Term”)
- The Closing Disclosure, page 1
- Our mortgage calculator, when you choose the term
