15-year vs 30-year mortgage: which one fits you?

The same loan, two terms

Take a $320,000 loan. Lenders usually price 15-year mortgages lower than 30-year ones — often by around half a percentage point or more — so for this example we'll use 6.75% for 30 years and 6.00% for 15 years.

Two things stand out. First, the 30-year loan costs more in interest than the house itself cost to finance — $427,185 on $320,000 borrowed. Second, the 15-year payment is only about 30% higher, not double, because so much of the 30-year payment is interest.

The equity gap after 10 years is just as striking: the 15-year borrower owes about $133,000 less. That matters if you plan to sell, refinance or retire in the next decade.

When a 15-year mortgage makes sense

• The higher payment fits comfortably within your budget — ideally still under the 28% guideline explained in how much house can I afford.
• You want to be mortgage-free before a specific date, such as retirement or a child starting college.
• You already have an emergency fund and are on track with retirement savings.
• You'd rather commit to a disciplined payoff than rely on yourself to make voluntary extra payments.

When a 30-year mortgage makes sense

• Qualification: the lower payment lets you qualify for the home you need, or keeps your debt-to-income ratio at a safer level.
• Cash-flow safety: if your income is variable or you have one income in the household, a lower required payment is valuable insurance.
• Other priorities: high-interest debt, an emergency fund or employer-matched retirement contributions may be better uses of the monthly difference.
• Flexibility: you can always pay a 30-year loan faster; you can't pay a 15-year loan slower.

The middle path: a 30-year loan paid like a shorter one

What if you take the 30-year loan but pay the 15-year amount anyway — $2,700.34 a month, with the extra $624.83 going to principal?

• The loan is paid off in 196 months (about 16.3 years).
• Total interest is $208,762 — about $42,700 more than the true 15-year loan, because the 30-year rate is higher, but $218,000 less than the standard 30-year schedule.
• If money gets tight, you can drop back to the required $2,075.51 at any time.

You're effectively paying about $42,700 over the life of the loan for the option to lower your payment whenever you need to. For some households that option is worth it; for others the guaranteed savings of the 15-year loan win. Model any extra amount in the extra payment calculator.

Don't forget 20- and 25-year terms

Many lenders offer terms between the two extremes. At the same 6.75% rate, here's how the payment and total interest change on $320,000:

Going from 30 to 20 years raises the payment by about $358 a month and cuts total interest by more than $163,000. A 20-year loan can be a sensible compromise if the 15-year payment feels too tight.

A quick way to decide

1. Calculate both payments with your real rate quotes in our calculator, including taxes and insurance.
2. Check the 15-year payment against your budget with a full emergency fund in place.
3. If it fits easily, the 15-year loan's lower rate and forced savings are hard to beat.
4. If it's tight, choose the 30-year (or a 20-year) and set up an automatic extra payment you can pause if needed.

This guide is for general information and is not financial advice. Example figures use the standard amortization formula and are rounded. How we write our guides.