The shorter loan usually costs less interest; the longer one costs less each month and leaves room in your budget. A 30-year loan with extra payments sits in between.
Side by side
| 15-year mortgage | 30-year mortgage | |
|---|---|---|
| Monthly payment | Higher | Lower |
| Total interest | Less | More |
| Rate | Usually lower | Usually higher |
| Equity | Builds quickly | Builds slowly at first |
| Flexibility | The higher payment is required every month | You can pay extra when you choose, and fall back to the lower payment when you need to |
| Qualifying | The higher payment raises your debt-to-income ratio | Easier to qualify for |
When a 15-year mortgage fits
- The higher payment fits comfortably, with savings left over.
- You want the house paid off by a set date, such as retirement.
- You want the lowest total cost.
When a 30-year mortgage fits
- You want the lowest required payment, or need it to qualify.
- Your income varies, so flexibility matters.
- You’d rather invest or save the difference.
- You plan to pay extra anyway, but want the option not to.
Guides and calculators
- Loan term comparison calculator
- Mortgage payment calculator
- Conventional loans
- Refinancing
- ARM vs fixed-rate mortgage
Questions
Is it better to get a 15-year or 30-year mortgage?
If the 15-year payment fits comfortably, it saves the most interest. If it would strain your budget, a 30-year loan with extra payments when you can afford them gets you part of the saving with less risk.
Can I pay off a 30-year mortgage in 15 years?
Yes, by paying extra principal each month, as long as the loan has no prepayment penalty, which most home loans don’t. The rate is usually a little higher than a 15-year loan’s, so the saving is smaller.
Is a 20-year mortgage a good middle ground?
Often. It costs less interest than 30 years with a smaller payment jump than 15. The loan term comparison calculator shows all three side by side. See also: Loan term comparison calculator.
