15-Year vs 30-Year Mortgage
Choosing between a 15-year and 30-year mortgage is one of the biggest financial decisions you'll make. A shorter term means higher monthly payments but dramatically less interest paid overall.
30-Year Mortgage
A 30-year fixed-rate mortgage spreads payments over 360 months, resulting in lower monthly payments but significantly more total interest.
- •Lower monthly payments
- •More interest paid over the life of the loan
- •Higher interest rates (typically 0.5-0.75% more)
- •More affordable for first-time buyers
15-Year Mortgage
A 15-year fixed-rate mortgage has higher monthly payments but builds equity faster and saves tens of thousands in interest.
- •Higher monthly payments (~40-50% more)
- •Much less total interest paid
- •Lower interest rates
- •Build equity twice as fast
Key Differences
| Aspect | 30-Year Mortgage | 15-Year Mortgage |
|---|---|---|
| Monthly Payment ($300k, 6.5%) | ~$1,896 | ~$2,613 |
| Total Interest Paid | ~$382,633 | ~$170,356 |
| Interest Savings | Baseline | Save ~$212,000 |
| Typical Rate | 6.5% | 5.75-6.0% |
| Qualification | Easier (lower DTI needed) | Harder (higher income needed) |
| Equity Build Speed | Slower | Much faster |
When to Use Each
Choose a 30-year mortgage if you need lower payments or want to invest the difference. Choose a 15-year mortgage if you can afford the higher payments and want to save on total interest and build equity faster.
Frequently Asked Questions
How much do you save with a 15-year mortgage?
On a $300,000 loan, you can save over $200,000 in total interest by choosing a 15-year over a 30-year mortgage. The exact savings depend on your rates.
Can I just pay extra on a 30-year mortgage?
Yes, making extra payments on a 30-year mortgage is a flexible alternative. You get the safety of lower required payments while being able to pay it off faster when cash allows.