One of the biggest decisions when getting a mortgage is choosing the loan term. While 30-year mortgages are more common, 15-year mortgages can save you tens of thousands in interest. Let's break down the differences.
Side-by-Side Comparison
Here's how a $300,000 loan compares at typical rates:
| Factor | 30-Year | 15-Year |
|---|---|---|
| Interest Rate | 7.0% | 6.25% |
| Monthly Payment | $1,996 | $2,572 |
| Total Interest | $418,560 | $162,960 |
| Total Cost | $718,560 | $462,960 |
| Interest Saved | — | $255,600 |
30-Year Mortgage
Advantages
- • Lower monthly payment
- • More financial flexibility
- • Easier to qualify for
- • Can invest the difference
- • Better for growing families
Disadvantages
- • Much more interest paid
- • Builds equity slower
- • Higher rate than 15-year
- • Takes twice as long to own free & clear
15-Year Mortgage
Advantages
- • Massive interest savings
- • Lower interest rate
- • Build equity faster
- • Own home sooner
- • Psychological benefit of being debt-free
Disadvantages
- • Higher monthly payment
- • Less financial flexibility
- • Harder to qualify for
- • May limit other investments
When to Choose Each
Choose 30-Year If:
- • You're early in your career with income growth potential
- • You want flexibility for other financial goals
- • You can invest the payment difference for higher returns
- • You plan to move within 7-10 years
- • Your budget would be stretched by the 15-year payment
Choose 15-Year If:
- • You're established in your career with stable income
- • You want to be mortgage-free before retirement
- • You value guaranteed interest savings over potential investments
- • You plan to stay in the home long-term
- • You can comfortably afford the higher payment
The "Best of Both" Strategy
Can't decide? You can get a 30-year mortgage and make extra payments as if it were a 15-year. This gives you:
-
The flexibility of a lower required payment if needed
-
Most of the interest savings of a 15-year term
-
Freedom to skip extra payments during tough months
Use our extra payment calculator to see how this strategy would work for you.
Calculate both options for your situation
Mortgage Calculator