Mortgage decision
15-year vs 30-year mortgage
Compare a 15-year and a 30-year fixed mortgage: monthly payment, total interest, rate and flexibility. See how extra payments can close the gap.
15-year
A shorter fixed term. The monthly principal-and-interest payment is higher, but the loan is repaid faster and usually costs less interest overall.
30-year
A longer fixed term. The monthly payment is lower, which can free up cash, but you pay interest for much longer and usually at a slightly higher rate.
| Factor | 15-year | 30-year |
|---|---|---|
| Monthly payment | Higher, because the same principal is repaid over half as many months. | Lower, which can make the budget more comfortable. |
| Total interest | Usually much lower over the life of the loan. | Usually much higher, even if the interest rate is similar. |
| Interest rate | Often slightly lower than a comparable 30-year rate. | Often slightly higher than a comparable 15-year rate. |
| Flexibility | Less room in the monthly budget. A higher payment is harder to absorb if income drops. | More room in the monthly budget, and many loans allow extra payments without penalty. |
| Wealth building | Equity builds faster because more of each payment goes to principal. | Equity builds more slowly, but the lower payment can be invested elsewhere. |
| Best fit | Stable income, a comfortable emergency fund and a long-term plan to stay. | Tighter cash flow, variable income or a preference for keeping monthly costs low. |
Choose 15-year if…
- You can comfortably afford the higher payment.
- You want to minimize total interest.
- You plan to keep the home and the loan for the long term.
- You already have a solid emergency fund.
Choose 30-year if…
- The higher payment would strain your budget.
- You want flexibility for investing or other goals.
- You may move or refinance before the loan is repaid.
- You plan to make extra payments when cash allows.
The short version
A 15-year loan is not automatically better. It saves interest if you can comfortably afford the payment. A 30-year loan with deliberate extra payments can be a middle path: keep the lower required payment, then pay more when you can.
Rates and payments depend on your lender, credit, points and local costs. This comparison is general information, not a loan offer or financial advice.
Put it into practice
Use your own numbers instead of a generic example.
Terms used here
- AmortizationPaying off a loan in scheduled installments. Early payments are mostly interest; later payments are mostly principal. A shorter term or extra payments shift that balance faster.
- APRAnnual percentage rate. It expresses the cost of borrowing as a yearly rate, including some fees. APR is useful for comparing offers, but it is not the same as the interest rate or the monthly payment.
- EscrowAn account that holds money for a specific purpose, such as property taxes and homeowners insurance. A mortgage servicer may collect a monthly escrow amount and pay the bills when they come due.