If you're in the market for a new home loan and are wondering how 15-year vs. 30-year mortgage loans differ from each other, the key distinction is their overall long-term cost. A 15-year mortgage may have higher monthly required payments than a 30-year one, but it typically costs less in the long run, as you'll pay less in interest fees.
Having a better understanding of mortgage loan term differences and their associated payments is now more crucial than ever, given the increasing number of foreclosures in the U.S.
As CBS News reports, as of August 2025, foreclosure filings have been on the rise for six straight months. They're up 18% from the same period last year.
Avoid ending up in the same boat by knowing the basics of mortgage comparison and which home loan can give you more interest savings.
15-Year vs. 30-Year Mortgage Loan: Which Is Better?
If your primary goal is to get the most interest savings, mortgage loans with a 15-year term are your ideal home financing options. You'll make higher monthly payments over the duration of your home loan, but a bigger chunk goes toward paying off your principal (the original amount of money you borrow).
As a result, you'll also get out of debt sooner, as you'll pay off the loan faster.
You'd want to get out of debt quickly, as being debt-free can give you more sense of freedom, peace, and opportunity, as a CNBC article points out. You'll feel less stressed and may even experience a feeling of euphoria from not having to worry about creditors.
A 30-year mortgage, however, may be a better option if your top priority is to have lower monthly payments. Since they require you to pay less monthly, there's a higher level of short-term financial flexibility associated with longer-term types of mortgage loans.
How Can a 15-Year Mortgage Save You More?
A 15-year mortgage can save you more in the long run because, in most cases, these loans come with lower interest rates. Lenders face a lower risk over a shorter term, so they can "afford" to charge less in interest.
The lower interest rate, combined with the shorter term, can significantly reduce the total amount of interest you pay your lender over your loan's duration.
What Are the Disadvantages of a 15-Year Mortgage?
Depending on your finances and budget, you may find the higher monthly payments of 15-year mortgage loans to be their primary disadvantage. They're higher because you'd have to pay the loan off in half the time of a 30-year mortgage.
The higher monthly payments associated with a 15-year mortgage loan also pose affordability concerns. Since more of your monthly income will go toward your mortgage payments, you'd have less money for other expenses.
What Are the Pros of a 30-Year Mortgage?
The primary perk of opting for a 30-year mortgage over a 15-year one is that you'll pay your lender less every month.
Take a fixed-rate mortgage loan amount of $250,000 with a 4% interest rate, for instance. If you choose a 30-year term, your monthly payments will be $1,194.
Whereas if you pick a 15-year term, you'll have to pay $1,849 monthly, which is $655 more.
The lower monthly payments of a 30-year mortgage can also help improve and free up more of your household's cash flow. You can then use this as an opportunity to meet other financial obligations (e.g., pay off student or car loans) or make investments.
Is the Higher Overall Cost of a 30-Year Mortgage Worth It?
The higher overall cost of a 30-year mortgage may be worth it if you have a lot of other financial obligations at the moment. The lower monthly payments may help you feel more at ease.
They can help reduce the strain on your budget, and you'll be less likely to miss your dues and become delinquent.
Once you're earning more and have more cash to spare, you can make extra loan payments, provided your mortgage doesn't have a prepayment penalty. You can also refinance or recast your mortgage to get a better interest rate down the line.
Frequently Asked Questions
Is There Anything You Can Do to Get a Lower Mortgage Rate?
Yes. One of the most practical mortgage planning tips to help you snag a better loan rate is to ensure you have a good credit score. The higher your credit score, the more likely lenders will give you a low interest rate, as they'll consider you a "low-risk" borrower.
Lowering your debt-to-income (DTI) ratio is another excellent strategy, as it's one of the many primary factors lenders consider to determine your creditworthiness. You can find this out by dividing any monthly debt payments you have (e.g., credit card debts) by your monthly gross income.
Per Investopedia, lenders typically prefer borrowers to have a DTI ratio of 36% or less.
Will Making a Bigger Down Payment Help With Your Mortgage in Any Way?
Definitely. The larger your down payment, the less you'll have to borrow. The less you borrow, the smaller the amount of money the mortgage rate applies to, letting you save more on interest fees.
You could also avoid the added expense of private mortgage insurance (PMI) if you make a down payment of at least 20%. PMI is a type of insurance that protects the lender, not you, the borrower, from financial loss should you default on your conventional mortgage.
Making a significant down payment can also help you appear more creditworthy, so lenders are more likely to approve your mortgage application and even charge you a better interest rate.
When Should You Refinance Your Mortgage?
Consider refinancing your mortgage if you qualify for a lower interest rate. Do the same if your finances have improved and stabilized, and you can already afford to make higher monthly payments with a shorter-term loan.
Smart Homeownership Means Choosing the Right Mortgage Term
Knowing how 15-year vs. 30-year mortgage loans compare is key to wise home buying and ownership, as your choice will significantly impact your monthly and long-term budget. Choose a 15-year loan if you can afford higher monthly payments, but go with a 30-year one if you want more short-term flexibility and affordability.
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