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15-year vs. 30-year mortgages
Learn which of these popular, fixed-rate options is the right one for you.
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Term Length
A 30-year mortgage offers high stability with low monthly payments, while a 15-year mortgage costs more in the short term but saves you money over the long haul. Considering the benefits and drawbacks of both can help you decide which way to go.
How do 15-year and 30-year mortgages compare?
The cost of your mortgage varies based on your choice of a 15- or 30-year term. Your term affects your monthly payment, interest rate and qualifications, among other features.
| Feature | 15-year mortgage | 30-year mortgage |
|---|---|---|
| Monthly payments | Higher | Lower |
| Interest rates | Lower | Higher |
| Cost over time | Lower | Higher |
| Qualification | Higher | Lower |
| Home equity | Builds faster | Builds slower |
Monthly payments
A 30-year mortgage comes with lower monthly payments. You’re spreading the cost of the loan out over twice the time, which can give you more flexibility in your monthly budget.
Interest rates
While it may not seem intuitive, interest rates for loans of the same amount can vary based on the term. Because the loan is shorter and costs less for the lender, a 15-year mortgage is seen as less risky, and can carry a lower interest rate than a 30-year mortgage.
Cost over time
Higher interest rates and a longer term means that a 30-year mortgage costs more than a 15-year option. A 30-year mortgage can also attract additional fees, especially government-backed loans like FHA, VA and USDA loans.
Application standards
Because the amount you’re paying each month is higher with a 15-year mortgage, the application standards are generally higher. Your income needs to support your monthly payments, so you’ll need a larger income or lower debt-to-income ratio for a 15-year mortgage than a 30-year mortgage.
Home equity
The quicker you pay off your interest, the faster you build equity. A 15-year mortgage allows you to bank equity that you can tap into much faster than a 30-year mortgage.
15-year vs. 30-year mortgage payment comparison
Monthly, a 30-year mortgages can seem less painful, but over time, you’ll pay thousands more in interest than with a 15-year mortgage. Not only is the interest rate usually higher on a 30-year mortgage, but it’ll accumulate for twice the amount of time.
Compare the total cost of your $300,000 mortgage with a 4.25% fixed interest rate.
| Mortgage amount | Interest rate | Monthly payment | Interest paid | Total amount |
|---|---|---|---|---|
| 15-year mortgage | 4.25% | $2,257 | $106,230 | $406,230 |
| 30-year mortgage | 4.25% | $1,476 | $231,295 | $531,295 |
This means that even though you’d save $781.02 each month with a 30-year mortgage, you’ll end up paying an extra $125,065 in the long run.
These estimates don’t take a down payment into account, which affects your overall monthly payment and total interest over the life of the loan. The more you pay up front, the less interest accumulates over time.
Choose a 15-year mortgage if:
You can qualify for the shorter term, you can comfortably afford the additional cost every month and you already have savings built up for emergencies.
A 15-year mortgage allows you to pay off your home faster and for less money. If you’re not financially prepared with savings or money for emergencies, the higher monthly payment can quickly become a burden.
Choose a 30-year mortgage if:
You want more flexibility to save, or want to buy more property than you can afford with a 15-year mortgage. Saving for retirement or a rainy day is important, and a lower monthly mortgage payment could support that. But you’ll pay more to spend more with a 30-year mortgage.
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Bottom line
A 30-year mortgage allow you to keep more money in your pocket from month-to-month, but you’ll save more in the long run with a 15-year mortgage. If you’re still unsure of which to choose, learn more about mortgages and how they work.
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