MORTGAGE GUIDE
15-year versus 30-year mortgage: what actually changes?
A shorter mortgage term usually requires a higher scheduled payment but reduces the number of months in which interest can accumulate. A longer term can offer more monthly flexibility at the cost of more interest.
A $320,000 loan example at a fixed 6% rate
For illustration only, both scenarios use the same loan balance and rate. Real lender quotes for different terms can have different rates and fees.
| Term | Monthly principal and interest | Lifetime interest |
|---|---|---|
| 15 years | $2,700.34 | $166,061.53 |
| 30 years | $1,918.56 | $370,682.20 |
For this illustration, the 15-year payment is approximately $782 more per month. Its lifetime interest is substantially lower. These examples exclude taxes, insurance and other costs.
Which is better for you?
A 15-year term may fit a household with stable income and room in its budget. A 30-year term offers lower required payments and the option to make extra principal payments if the loan permits them. Compare both required payments and total loan costs rather than selecting a term based only on the interest rate.
Compare terms using the mortgage calculator. Enter 15 years, note the result, then switch to 30 years with the same loan assumptions.