15-year vs. 30-year mortgage: Which is right for you?
Key takeaways
- A 15-year mortgage means larger monthly payments, but a lower interest rate.
- A 30-year mortgage offers a more affordable monthly payment, but you’ll pay more in interest.
- Over time, a 30-year mortgage is substantially more expensive than a 15-year loan.
Your monthly mortgage payment will probably be the largest line item in your household budget. Impacting the size of those payments is the term of your mortgage, or how long you have to pay it off. Most people choose 30-year mortgages, which have lower monthly payments, but cost more in interest. A 15-year mortgage requires a higher monthly payment — but you’ll typically receive a lower interest rate and pay less in interest overall.
Here’s how to decide whether a 15-year or a 30-year mortgage is right for you.
15-year vs. 30-year mortgages: What is the difference?
| 15-year mortgage | 30-year mortgage | |
|---|---|---|
| Monthly payments | Higher | Lower |
| APR | Lower | Higher |
| Total interest charged | Less | More |
The main difference between a 15-year and a 30-year mortgage is how long you have to pay each off. The 30-year, fixed-rate mortgage is the go-to for most Americans buying a home because it allows the borrower to spread loan payments out over a longer period of time. That makes the monthly payment more manageable than if you paid the loan off in half the time, as you would with a 15-year mortgage.
However, lenders almost always charge a lower interest rate — and a lower APR — for 15-year loans than 30-year loans. On top of that, you’ll pay interest on a 30-year loan for twice as long, leading to a much higher total interest cost.
Keep in mind that, even with lower interest rates, monthly payments on 15-year loans are almost always higher than for 30-year loans.
15-year vs. 30-year mortgage example
The cost difference between a 15- and 30-year mortgage can be significant.
Below is an example of the options on a $300,000 loan. We’ve assumed 6.76 percent interest on the 30-year term and 6.01 interest on the 15-year term, based on Bankrate’s national survey of lenders as of March 24.
| 15-year mortgage | 30-year mortgage | |
|---|---|---|
| Interest rate* | 6.01% | 6.76% |
| Monthly loan payments | $2,533 | $1,948 |
| Total interest paid | $155,974 | $401,204 |
| Total mortgage cost | $455,974 | $701,204 |
| * As of March 24, 2025 |
While you’ll save almost $600 per month by choosing a 30-year loan over a 15-year loan, you’ll also pay more than $245,000 in additional interest over the life of the loan.
15-Year Or 30-Year Fixed Mortgage Calculator
You can crunch your own numbers with Bankrate’s 15-year or 30-year fixed mortgage calculator.
Visit the calculator15-year mortgage pros and cons
A 15-year mortgage might sound like a more attractive option. You’ll likely save a bundle in interest and pay off your home faster. Still, there are trade-offs to consider.
Pros
- Typically lower interest rate
- Much less interest paid over the life of the loan
- Loan is paid off sooner
- Builds home equity faster, as payments toward loan principal are higher
Cons
- Monthly payments are higher to speed up repayment
- Can be harder to qualify for
- Less wiggle room in budget for emergencies or investments
30-year mortgage pros and cons
A 30-year mortgage may give you more breathing room in your monthly budget, and it’s generally easier to qualify for. But you’ll pay far more in interest.
Pros
- Monthly payments are lower because the life of the loan is extended
- Flexibility to pay back the mortgage sooner as you may choose to make higher or extra payments as you are able
- Potentially more money available for emergencies or savings and investment
- Lower income qualifications, as you do not need to prove an ability to make payments on a condensed schedule
Cons
- Typically higher interest rate
- Loan takes longer to pay off
- Much more paid in interest over loan lifetime
- Loan is more expensive overall
Alternatives to 15-year and 30-year mortgages
Although they’re the most common, 15- and 30-year mortgages aren’t the only terms or loan types available. Alternatives include:
- 10 year: These loans are ideal if you want to be aggressive with your repayment strategy. Expect a steep monthly payment, which could be worth it considering the amount of interest you’ll save.
- 20 year: You’ll get a slightly more affordable monthly mortgage payment than a 10-year mortgage but can still save a bundle in interest and pay your loan off faster.
- 40 year: Relatively rare, but offers the lowest monthly payments. Still, you might want to refinance later to increase your monthly payment, but minimize the overall cost.
- Interest-only mortgage: This option lets you make interest-only payments during an introductory period, followed by much higher principal and interest payments over the remaining loan term.
- Adjustable-rate mortgage (ARM): ARMs are generally 30-year mortgages with low fixed rates during an initial period. After that, the mortgage enters a variable-rate period, where the rate changes periodically. For example, with a 10/1 ARM, you’ll get a fixed interest rate for the first decade of your loan. When that ends, your rate will change once a year for the remaining 20 years. ARMs are best if you plan to move or refinance before the introductory period ends.
Consider how long you plan to stay in your home versus the duration of the mortgage you’re considering. If your goal is to get as low a payment as possible for a short time, ARMs or interest-only mortgages might make sense. If you’re planning to buy your forever home, a fixed-rate loan with predictable payments is probably the best choice.
Prepay a 30-year mortgage
You can always take out a 30-year mortgage and make higher or more frequent payments to pay it off sooner. Also known as prepaying your mortgage, this strategy effectively lets you create your own 15-year mortgage from a 30-year one.
Before going this route, check whether your loan has a prepayment penalty. These days, most mortgages don’t — but if yours does, the penalty usually only goes into effect if you pay off the mortgage, or a significant portion of it, within the first three to five years of the loan.
Is a 15-year or 30-year mortgage better for you?
Bear in mind that you’ll need stronger financials to qualify for a 15-year mortgage, because the monthly payments are higher. Lenders will want to see a higher income and lower debt-to-income ratio.
Assuming you can qualify for both loans, though, you’ll want to make your decision on the monthly payment you can afford. If you can manage the monthly payment on a 15-year loan without becoming house poor, and while still saving for retirement and other goals, it’ll save you a lot of money in the long run. If not, a 30-year loan is the way to go.
Here’s a closer look at some key factors to consider when choosing between the two:
- Calculate mortgage payments for homes at multiple price points: Bankrate recommends following the 28 percent rule and the 36 percent rule. These rules advise buyers that no more than 28 percent of their gross income should go toward a mortgage payment each month and that no more than 36 percent of their gross monthly income should go toward monthly debt payments.
- Take a close look at your monthly budget. Evaluating your spending plan and financial commitments can help you determine the mortgage payment that will be comfortable for you. If you’ll feel consistently overextended by the payments on a 15-year mortgage, you may consider getting a 30-year loan and making extra payments to it for an earlier payoff.
- Understand your income and obligations. If your income is seasonal, commission-based or otherwise variable, you may have a hard time qualifying for a 15-year mortgage, and you may value the flexibility you get with a 30-year loan.
Bankrate’s mortgage calculator can help you estimate monthly payments for a 30-year versus a 15-year mortgage so you can get a clearer picture of how much house you can afford based on your income.
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