15-year vs. 30-year (2)

When future homebuyers apply for a loan, they look for affordability, flexibility and consistency.

Which is why many people look to use a fixed-rate mortgage. It is the most common type of home loan because monthly payments, interest and principal remain the same throughout the entire loan.

In contrast to an adjusted rate mortgage (ARM), interest rates can increase or decrease without warning during the life of the loan. This can make budgeting difficult for homeowners because monthly payments will not be consistent.

On the other hand, a fixed-rate mortgage, monthly payments will be the exact same throughout the loan.

Not only do fixed-rate mortgages continue to keep the same payments, they have two terms people can choose from.

Fixed-rate mortgages can be either financed as a 15-year or 30-year term.

Both offer different benefits and drawbacks, which raises a few questions:

Which term is a better choice?

What are the main differences?

What should I choose?

We have all the answers to your questions!

What is the main difference?


The main difference is straightforward. The duration of the loan varies, which also directly affects monthly payments, interest and principal.

And here is how:

A 15-year fixed-rate mortgage loan is attractive to borrowers that want to pay off their loans faster. This is possible because a 15-year mortgage has higher monthly payments and less interest over the life of the loan.

On the other hand, a 30-year fixed-rate mortgage loan has lower monthly payments, but has a significantly higher amount of interest needed to be paid throughout the loan’s term.

When choosing between a 15-year and 30-year fixed-rate mortgage, this decision will ultimately be reflected off your financial situation.

You will need to determine how much money you are comfortable with putting aside for the down payment, monthly mortgage payments, insurance fees and other financial obligations.

Deciding which mortgage lender works for you can be determined with the help of your mortgage lender. They can evaluate your credit history, finances and objectively reach a decision on what loan suits you more appropriately when you apply.

These experienced professionals will be able to explain both loans and point out key differences that may appeal more to you.

If you are stuck between the two, we have broken down everything you need to know.

30-year fixed


A 30-year fixed-rate mortgage is appealing to borrowers that want affordable, steady and consistent monthly payments throughout the life of their loan.

This longer payment plan is attractive to people that plan on living in their home for multiple years, similar to the term of the loan.

If you do not see yourself moving in the future, this low monthly payment plan may be more suitable for you.

A 30-year fixed-rate mortgage is designed over a 30-year timeframe, which consists of 360 payments. These payments are lower compared to a 15-year fixed-rate mortgage. However, you will pay more for interest because there is more time for interest to build.

Because payments are lower, it is easier for people to budget and organize their finances. They will be able to anticipate monthly payments, which can help them consistently set aside an appropriate amount of money needed for other bills, loans and debts.

A 30-year mortgage also gives borrowers the option to pay more toward their principal each month, so they can pay off their loan sooner.

15-year fixed


A 15-year fixed rate mortgage is ideal for borrowers that want to pay off their loan faster, pay less for their home and build equity quickly.

This shorter payment plan allows people to pay off their loans faster compared to a 30-year mortgage. This advantage gives people the opportunity to plan for future events or expenses that requires a large amount of money.

For example, if you plan to retire early, start having kids or want to begin saving up for college expenses, having a shorter loan life allows you to get rid of monthly mortgage payments sooner. Having this heavy financial responsibility lifted off your shoulders will help open up your finances for other extravagant expenses.

A 15-year fixed-rate mortgage is designed differently compared to a 30-year fixed-rate mortgage. Simply, the amount of time needed to pay off the loan is cut in half, meaning, it takes less time to own the home with a 15-year mortgage.

However, this route also entails higher monthly mortgage payments, but it requires a lot less interest to be paid for.

Did you know by choosing a 15-year fixed-rate mortgage can actually save you thousands of dollars in interest?

Quick recap

To sum it up, here is a little quick recap of what each term has to offer:

30-Year Fixed:

  • Lower monthly payments
  • Pay more for interest
  • Able to budget easier
  • 3-5% minimum down payment
  • Minimum credit score of 620
  • Regular, qualified income required

15-Year Fixed:

  • Higher monthly payments
  • Pay less for interest
  • Able to build equity quickly
  • 3-5% minimum down payment
  • Minimum credit score of 620
  • Regular, qualified income required

What to choose?


As you can see, there are significant differences between a 15-year and 30-year fixed-rate mortgage.

What it really comes down to is what you are comfortable with paying monthly.

You can ask your lender to paint you a picture of both loan terms, so you can have a better understanding of what you can expect. By having this projected scenario of your monthly payments, you will be able to plan accordingly for the future.

The bottom line: this decision can be reached by evaluating your own financial and personal situation.

Before choosing a term, compare lenders to see who can offer you the best interest rate and principal based on your particular loan and credentials.

Calculate your finances, research several lenders and compare rates to see where you can get the best deal, so you can make the right decision.

Everyone’s situation and priorities are different, so the best choice is the option that works best for you.

And down the road, you can always refinance your mortgage loan to shorten or extend your term to better manage monthly mortgage payments or pay off the loan sooner. It all depends on what you are comfortable with.

15 v 30 year

which one is for me?

Find out today!

mortgage loan process

Pin It on Pinterest