A 15-year loan generally has a higher monthly payment but lower total interest and faster equity buildup. A 30-year loan generally has a lower monthly payment and more flexibility, at a higher long-run cost. The right choice depends on cash flow, discipline, and what else the extra cash could do.
Who this may fit
Borrowers deciding between a shorter and longer amortization on a conventional loan.
Key decision factors
- Monthly payment tolerance
- Total interest paid over the loan life
- Opportunity cost of the extra payment
- Flexibility to make extra principal payments on a 30-year term
Illustrative example
Common mistakes
- Focusing only on the note rate difference
- Ignoring the difference in payment flexibility
- Overestimating discipline to voluntarily make extra payments
Questions to ask a licensed loan officer
- What are the pricing differences between 15 and 30-year for my file?
- How would a 30-year with a target extra payment compare to a 15-year?
- How do the two terms affect my qualification and reserves?
Common questions
Is a 15-year mortgage worth it?
It can be if you can comfortably afford the higher payment and still keep emergency savings. You'll usually pay much less total interest and build equity faster, but you'll have less monthly flexibility.
Can I pay off a 30-year loan in 15 years?
Often, yes, by making extra principal payments, if your loan terms allow prepayment. Check with your servicer how to apply extra payments. The rate on a 30-year loan may differ from a 15-year, so the results won't be identical.
Do 15-year mortgages have lower rates?
Shorter terms are often priced differently from 30-year terms, but pricing depends on the market and your file. Ask a lender for both options on the same day to compare.
Which term makes it easier to qualify?
A 30-year term has a lower required payment, which lowers your debt-to-income ratio. That can make qualifying easier than with a 15-year loan of the same amount.
Choose your next step
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