15-Year vs. 30-Year Mortgage


Have you considering getting in on the housing market? There are a few mortgage options out there. 15-year or 30-year. Which one? When buying a house, all the options for financing can be pretty overwhelming. When it comes to getting a mortgage, one of the most important parts to consider is the loan term. Nearly 90% of home-buyers choose a 30-year fixed mortgage, but you’ll need to consider which mortgage options are right for your situation.

Today, we will be diving deep into two of the most common loan terms, 15- and 30-year mortgages, and discuss which one might work best for you.

15-Year Or 30-Year Mortgage: What’s The Difference?

15-year and 30-year mortgages are both loans that allow you to pay for your house over an extended period of time by making monthly payments. The main difference between them is that a 15-year mortgage is designed for you to pay off the loan in 15 years, while a 30-year mortgage is set up for you to pay it off in 30 years instead.

So, why choose a 30-year loan when you could pay it off in 15 years? The differing loan terms affect a few things, including the amount of your monthly mortgage payment and the overall cost of your mortgage. With a 15-year loan, you’ll pay off your loan faster, but your payments will be significantly higher each month.

With a 30-year loan, you get twice the amount of time to pay off the same loan amount, which results in more affordable monthly payments. At the same time, this means you’ll end up paying more interest.

Pros and Cons of a 15-Year Mortgage

Because it has a shorter term, a 15-year mortgage will be much cheaper in the long run, but it limits your other options.


  • Mortgage Rates are Lower. Shorter loan terms typically come with lower interest rates because the lender is exposed to fewer years of risk.
  • You’ll build equity faster. You pay down the principal balance faster on a shorter schedule, which is helpful if you want to eventually take out a home equity loan or line of credit.
  • You’ll spend less on interest. Because interest rates are typically lower and you pay down the debt faster, you spend less on interest costs.


  • Monthly payments will be much higher. You’re squeezing all your payments on a shorter amortization schedule, so your monthly payments increase accordingly.
  • More of your budget goes toward housing. Committing to a 15-year mortgage may leave you with less money to devote to other investments, such as a retirement plan, funding a child’s college fund or even taking a vacation.
  • You’ll be limited on your home purchase price. Because a 15-year mortgage comes with higher monthly payments, higher monthly payments for a 15-year mortgage can mean qualifying for a less expensive loan and settling for a smaller home or missing out in a dream neighborhood.

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Pros and cons of a 30-year mortgage

A 30-year fixed mortgage costs more in interest over the life of the loan, but the monthly payments are more affordable.


  • Your monthly payment will be lower. The loan term is stretched over a longer period of time, so each payment is lower and therefore more affordable.
  • You’ll have more flexibility in case of an emergency. Less of your monthly budget goes toward housing costs, which means more money can go toward investing, saving, or achieving other financial goals.
  • You can get a more expensive home. The lower payments afforded by a 30-year mortgage mean you have a better chance of qualifying for a bigger mortgage.


  • You’ll have a higher mortgage rate. Because the lender’s risk is spread over more years, interest rates are typically higher.
  • You’ll spend more on your loan overall. Interest costs increase the longer your loan term is.
  • It will take you longer to build equity. As such, you may not have as much to work with if you want to tap into your equity when you retire or use it to buy a new home.

Other Mortgage Options

If paying off your mortgage quickly is a goal you have, you can take out a 30-year loan and pay extra each month. With this mortgage options method, you would combine the flexibility offered by a 30-year mortgage with the interest savings of a shorter term. Make sure to check with your mortgage company before going this route to avoid prepayment penalties.

With this option, you can choose a 30-year term and pay extra toward the principal balance each month. You’re still building equity more quickly, but you also have the ability to handle other expenses if you need to during one month. This strategy will get you out of debt sooner, and you’ll pay less interest than you would if you were to stretch payments out over the full 30 years.

RELATED: How and Why to Consider Refinancing Your Mortgage

The Bottom Line

Deciding between 15- and 30-year mortgage options depends on your personal goals and your financial situation. Generally, a 15-year mortgage means higher monthly payments. This means you’ll be able to pay the loan off faster. Pay less interest over the life of the loan. A 30-year mortgage generally offers lower monthly payments. With this option, the total amount you pay over the life of the loan will usually be higher.