15-Year Vs. 30-Year Mortgage Calculator: How To Decide (2024)

Mortgages come in all shapes and sizes, from low down-payment options to jumbo loans. Beyond the type of mortgage you choose, you must also decide how long you want to repay the loan, which is called the mortgage term.

There are many different types of mortgages available to help you purchase a home, but the most common ones tend to last 15 or 30 years. If you want lower monthly payments, you may have to stretch your home loan to 30 years. A 15-year mortgage may have higher monthly payments but reduces the life of the loan in half, which also cuts down on how much interest you pay.

To determine what type of mortgage works better for you and compare your total costs, simply plug in the total cost of the home, your expected down payment amount and the interest rate below.

What Is a 30-year Mortgage?

When you get a traditional 30-year mortgage, you pay a set principal and interest amount every month divided over a span of 30 years, or until you sell the home and pay off the mortgage sooner.

Pros and Cons of a 30-year Mortgage

Whether a traditional 30-year mortgage is right for you depends on your financial situation.

Pros of a 30-year Mortgage

• Lower monthly payments since the loan is spread out over 30 years
• Can always pay more than the required minimum to pay off your mortgage faster
• Lower payments mean you could qualify to buy a more expensive house

Cons of a 30-year Fixed Mortgage

• Will end up paying more in interest over the life of the loan compared to a shorter term
• Lower monthly payments typically mean it will take longer to build up equity in your home
• Higher interest rates (typically the longer the term, the higher the rate)

What Is a 15-year Mortgage?

Similar to the 30-year mortgage, you will have a set monthly payment based on the principal and interest but divided over 15 years.

Pros and Cons of a 15-Year Mortgage

Here are some things to keep in mind if you’re considering a 15-year mortgage.

Pros of a 15-year Mortgage

• Pay less in interest over the duration compared to a 30-year term
• Pay off the loan and own the home sooner with the shorter term
• Get rid of private mortgage insurance (PMI) sooner by reaching the 20% equity threshold faster

Cons of a 15-year Mortgage

• Higher monthly payments due to the shorter term
• Less wiggle room in your monthly budget and fewer funds available to put into savings
• Higher monthly payments might not allow you to afford the house you really want

How to Pay Off a 30-year Mortgage in 15 Years

It is possible to pay off your 30-year mortgage sooner. Here’s how you can accomplish that:

• Make extra payments each month. This will not only help you chip away at your loan more quickly, but it will also lower the amount of interest you pay over the life of the loan.
• Make bi-weekly payments. Instead of making monthly contributions toward your principal and interest, this will result in 26 half-payments (or 13 full payments), translating to one extra payment per year. But check with your lender first to confirm they accept bi-weekly payments.
• Make an additional monthly payment each year. The bulk of the interest you are charged usually accumulates in the first 10 years of your loan. So, if you can make just one extra payment a year, you’ll get ahead.
• Refinance into a shorter term. You can refinance your home loan and get a new 15-year mortgage loan to shorten your repayment. Just keep in mind this would result in a higher monthly payment.
• Recast your mortgage. By recasting, you’ll reduce your mortgage balance—and your monthly payments—via a lump-sum payment toward the principal amount.
• Sell your house and move. If making the monthly payments is becoming too much of a burden, you could sell the house to pay off the mortgage and move to a more affordable home or area.

15-year vs. 30-year Mortgage: How to Decide

Both a 15-year and 30-year mortgage can have fixed interest rates and fixed monthly payments over the life of the loan. However, a 15-year mortgage means you will have your home paid off in 15 years rather than the full, 30-year mortgage so long as you make the required minimum monthly payments.

The 15-year mortgage tends to have a lower interest rate, though mortgage rates overall have been low for some time. However, the monthly payments are higher on a 15-year mortgage because you are paying the principal off faster than a 30-year mortgage.

Deciding between the two depends on your financial situation, including your credit score and history, your down payment and how much cash reserves you’d like to maintain on a monthly basis.

A 15-year mortgage might be a better fit if you have more monthly cash on hand and want to pay off your home faster, for example. Alternatively, a 30-year mortgage might be better for someone who has a more limited budget or wants to save cash by paying less toward their mortgage but for a longer period of time. A longer-term mortgage also might make more sense if you plan to stay for decades.

The interest rate environment also plays a factor in how long you want to stretch out your mortgage. For example, if rates are low, it might make more sense to lock in that low rate for a longer term and then use your extra monthly cash to invest in something else that has a higher rate of return at the time, like stocks or buying an investment property. Whereas, if interest rates are high, you might want to get a shorter term mortgage so you only pay that interest rate for 15 years rather than 30 years.

There’s also the option to refinance from a 30-year mortgage to a 15-year mortgage down the road if your financial situation changes and you want to pay off your home loan faster or lower your interest rate.

Journalist Brai Odion-Esene contributed to this article.

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