15-Year vs. 30-Year Mortgage

How a shorter term changes your payment, total interest and flexibility.

The two most common mortgage terms are 15 and 30 years. A shorter term costs more each month but saves a large amount in interest, while a longer term lowers the payment and adds flexibility. The right choice depends on your budget and goals.

The payment difference

On a $320,000 loan at 6.5%, a 30-year term has a payment of $2,022.62. A 15-year term has a payment of $2,787.54, which is $765 more each month.

The interest difference

Total interest over 30 years is about $408,142. Over 15 years, it is about $181,758, a saving of roughly $226,385. In practice, shorter-term loans often come with a slightly lower rate, which would increase the savings further, though rates vary by lender and market.

Equity builds faster

With a 15-year loan, a larger share of each payment goes to principal from the start, so you build equity sooner and own the home outright in half the time.

Why many buyers choose 30 years

• The lower payment makes qualifying and budgeting easier.
• You keep more cash flow for savings, emergencies and other goals.
• You can still prepay extra when you want to.

A hybrid strategy

You can take a 30-year loan and pay it like a shorter one. If you add about $765 a month, you could pay it off in about 15 years while keeping the option to pay less if money gets tight. Ask your lender whether there are prepayment penalties and how extra payments are applied.

Things to weigh

• Income stability: a higher required payment is riskier if income varies.
• Other goals: retirement savings, emergencies and education costs compete for money.
• Your plans: if you expect to move within a few years, the benefits of a shorter term shrink.
• The rates offered: compare actual quotes for both terms.

Refinancing from 30 to 15

Some homeowners refinance into a shorter term when income rises or rates drop. Check closing costs and the break-even period, as discussed in our refinance guide.

Do not stretch too far

The payment should leave room for taxes, insurance, maintenance and savings. A 15-year loan that strains your budget can be riskier than a 30-year loan you can afford comfortably.

Compare both

Enter 30 and then 15 as the term in the mortgage calculator to see your payment and total interest, then try the home affordability calculator to check how each fits your income.

Qualifying and risk

Lenders consider your income compared with your payment, so a 15-year loan may reduce the price you qualify for. That is not necessarily bad, because it keeps you from stretching too far, but it does change your options when shopping for a home. Think about how a job change, new child or medical bill would affect a larger required payment.

The opportunity cost

Money used for a bigger mortgage payment cannot be saved or invested elsewhere. Some people prefer the guaranteed saving of paying down a mortgage, while others prefer flexibility. Neither is automatically right; it depends on your goals, risk tolerance and the rate on your loan.

Taxes and insurance stay the same

Property taxes and homeowners insurance do not depend on the term, so they add the same amount to either payment. When comparing, focus on the difference in principal and interest, then confirm the total monthly cost you can sustain. Add maintenance and utilities to see the real picture, and keep a reserve for repairs so a major expense does not force you to borrow again at a higher rate.

Ask for both quotes

Request written Loan Estimates for both terms from the same lender and compare APR, fees and total interest side by side before deciding.

Important

This guide is educational and not individualized financial advice. Loan terms vary by borrower, lender and market, so confirm details in the official disclosure.