15-Year Vs. 30-Year Mortgage: Choosing the Right Option for You

Your mortgage interest rate has a significant impact on your monthly payment. The higher your rate, the more interest you pay over time, which means your home purchase becomes more expensive. Even small changes in interest rates can have a big impact on your final costs. 

As of June 2025, the national average interest rate for a 30-year fixed mortgage is 6.89%. This drops to 6.09% for a 15-year fixed mortgage. A 0.80% change in interest adds up over the total payment period and could help you save thousands of dollars.     

As you prepare to purchase a home, you can choose between a 15-year vs. 30-year mortgage. While the interest paid is one of the driving factors in this decision, there are other considerations to keep in mind. This guide will take a deep dive into your interest savings (and potential to build wealth) while also helping you review your income stability, life stage, and financial goals. Here’s how you can make an informed decision for your finances.

15-Year vs 30-Year Mortgage Rates in 2025

Mortgage rates have remained stable over the past year across the middle-to-high 6% range. This means that buyers need to trust that the rates they choose today will stay in place for at least the near future. It’s unlikely that buyers will be able to refinance with the types of rates seen during the COVID-19 pandemic (below 3% in some cases) shortly after they move in.

With that, the table below highlights how mortgage rates can impact monthly payments and the total cost of a home. See how a 15-year vs. 30-year mortgage compares for different home values. 

Home Loan Savings Compared

You can see that the total cost of the loan increases significantly because of the higher interest rate for the 30-year term. While the monthly payment for the $300,000 home only varied by $516, the total savings for the loan was $227,028. As the home price increases, so do the monthly payments. However, the savings are astounding by the time you reach houses in the $500,000 range. 

However, these monthly payment estimates don’t cover the extra costs that come with your loan. The 10% down payment means you would need to pay private mortgage insurance (PMI) until you hit the 20% home equity threshold. Most loans also include property taxes, home insurance, and homeowners association (HOA) fees if applicable. A $1,7000 loan could be $2,500 monthly once all of these factors are included. 

This chart highlights how much you can save with a 15-year mortgage, but it’s important to do the math yourself. Consider how much more you would need to pay for shorter loan terms and what the extra savings mean for your budget and long-term wealth.

Pros and Cons of a 15-Year Mortgage

A 15-year mortgage provides considerable financial savings and other benefits, but it isn’t without its risks. Here are a few pros and cons to consider as you decide whether this option is right for you.

15-Year Mortgage Advantages

• Significant interest savings: Most homeowners save between $150,000 to $300,000 in interest by opting for a 15-year mortgage. 
• Faster equity building: You will own a larger percentage of your house because you are paying off your loan faster. This could be useful if you need to take out a home equity line of credit (HELOC). 
• You will be debt-free sooner: You can own your house and live without a mortgage payment faster.  
• You can grow your wealth: Paying off your house and saving on interest allows you to invest your income in other growth channels. 

15-Year Mortgage Disadvantages

• Higher monthly payments: The immediate cost of your home loan is higher because of the larger monthly payments. 
• Limited financial flexibility: With more of your income going toward the home loan, you might not have money left over for enjoyable expenses or investing. 
• Qualifying for these loans is harder: You may struggle to meet the income requirements to take out a 15-year mortgage. 
• You may decide to purchase a smaller home: If paying off your mortgage is the top priority, you may choose a smaller house or a different neighborhood where the costs are favorable for qualifying for 15-year loans.

Pros and Cons of a 30-Year Mortgage

While a 30-year mortgage is considered more stable, there are long-term financial drawbacks to choosing this option. Here are the pros and cons of this mortgage choice.

30-Year Mortgage Advantages

• Lower monthly payments: A smaller percentage of your gross monthly income will go toward your actual payment obligation, allowing you to use your money in other ways or grow your savings. 
• Mortgage interest deductions: You can deduct the total interest paid on your house each year when you file your taxes. This deduction provides income tax savings over a longer period. 
• You can make extra payments when possible: It’s possible to pay down your home loan quickly by making extra payments. This increases the flexibility of when and how you reduce the total interest on the loan.

30-Year Mortgage Disadvantages

• Higher total costs: You could pay hundreds of thousands more in interest over the course of your loan. 
• Slower equity accumulation: You will own a smaller percentage of your house, reducing the potential equity you can tap into.  
• Limited investment opportunities: Staying in debt longer can impact your ability to invest in other projects or accounts. This can slow retirement planning and prevent you from reaching other financial goals. 
• You may be tempted to overspend on your house: You might not realize just how much you are spending on interest throughout your loan.

Monthly Mortgage Payment Factors to Consider

There isn’t a single correct answer to determine whether you should take out a 15-year vs. 30-year mortgage. The ideal monthly mortgage payment depends on your budget, job stability, and life goals. Here are a few financial and lifestyle factors to review before you decide that higher monthly payments are the way to go. 

• Income stability: 15-year mortgages work best for those with predictable, stable incomes. If you aren’t worried about leaving your job (or the economy causing financial stress), then you might be able to handle these mortgage payments. If you work in a more volatile industry, you need to consider whether you can handle these payments during low-income periods. 
• Emergency funds: Consider how much you have in savings in case something goes wrong. This can include money for unexpected home repairs, medical bills, or periods where you can’t work. Experts recommend keeping three to six months of savings in an emergency fund. A 30-year mortgage lets you build these savings faster while reducing your monthly bills.  
• Financial goals: What else do you want to do with your money? Evaluate how much you are saving for retirement and what income you are allocating to other investments. You can grow your wealth differently with a 15-year vs. 30-year mortgage.  
• Lifestyle goals: Life is more than just saving money. There may be major expenses you want to save for or need extra cash to cover. For example, you might be saving for a wedding or or major vacation or know that you need extra cash each month to cover the cost of a new baby. Think about fun and beautiful life costs that you need money for. 

It may be better to take out a 30-year mortgage and then make extra payments for long-term financial stability.

15-Year Mortgage Qualifications

You will also need to calculate how much you can afford to pay each month to determine whether a 15-year mortgage is right for you. Start with your monthly income and calculate your debt-to-income ratio (DTI). This should be around 28% for a 15-year mortgage. Some loan programs want a lower DTI for a shorter-term mortgage to ensure the borrower can handle the payments. 

For example, if your gross monthly income is $6,000, then a DTI of 28% is $1,628. If you and your partner have a combined monthly income of $10,000, then your DTI would be $2,800. These calculation examples cover all forms of debt you pay off monthly. If you have a $300 monthly payment, then your household DTI drops to $2,500. 

Consider whether your DTI falls within your ideal house price range. The loan calculations should include property taxes and home insurance. Look at the annual percentage rate (APR) of the loan to track how much you will actually pay per month. 

The DTI needed for a 30-year loan is often higher, usually around 36%. This means that if you want to reach a monthly payment of $2,000, you would need to earn $68,000 for a 30-year mortgage and $88,000 for a 15-year mortgage.

Even if you plan to pay down your loan aggressively, you might not qualify for the 15-year loan. You may need to choose a 30-year mortgage or save for a larger down payment to stay within budget. 

Life Stage and Mortgage Term Selection

Each person has their own unique financial situation that determines the types of monthly payments they can handle and the various other expenses they need to account for. However, there are a few generational indicators that often determine the types of payments and interest rates that specific buyers want. Here is how different people might view the same interest payment and monthly budget estimates.

Young Professionals (25-35)

This group often benefits from 30-year mortgage loans. These buyers are still establishing their careers and deciding their paths in life. They may be in the market for starter homes before they settle down to grow their families or relocate to their dream city. They may also have other bills they want to pay off first, like student loans, which makes the lower monthly payments attractive. It’s possible to start with a 30-year loan and refinance to a 15-year mortgage in the future. 

Because these buyers have had less time to grow their wealth, they may need a 30-year mortgage because they have less saved for down payments. They may need to budget for mortgage insurance until they grow their equity. 

Established Families (35-50)

This group often faces competing financial priorities. They are at their peak earning years, but also have the highest level of family expenses. If these buyers have kids, they need to cover the living costs of the entire family, which means one or two salaries need to support multiple individuals. These buyers are also part of the “sandwich generation,” which means they provide care for both their kids and aging relatives at the same time. 

These buyers might also benefit from lower monthly payments with 30-year mortgages. This will allow them to make extra payments on the principal balance when possible.

Pre-Retirees (50-65)

These buyers can benefit from both the low interest rate and shorter payment plans of 15-year loans. This allows the buyers to eliminate debt before they enter retirement. They have also had the longest time to accrue wealth that can be used for higher down payments and larger monthly payments. 

However, depleting cash savings can be risky. There is no guarantee that a house will hold its value, and many pre-retirement professionals are encouraged to diversify their investments to reduce risk. Some buyers in this age range may also prefer to take out a 30-year mortgage while making extra payments when they can.

Alternative Strategies and Middle Ground Options

The choice between a 15-year vs. 30-year mortgage seems binary, but there are other ways to catch up on payments and save money over time. Here are a few ways to reduce your overall interest burden if you opt for a 30-year home loan. 

• Make extra payments: If you have extra cash that isn’t allocated to your emergency fund or investments, put it toward your principal balance. Even a few extra deposits each year can have a bit impact on your total mortgage interest bill. 
• Make bi-weekly payments: Instead of monthly payments, ask your lender to draw your payments bi-weekly. This means you will make 13 annual payments instead of 12 because there are 52 weeks in a year. This can take a few years off of your mortgage and reduce your mortgage interest burden. 
• Look into mid-term mortgages: While less common, you might be able to take out a 20-year mortgage loan on your home with a favorable annual percentage rate. This lets you compromise on interest savings vs. monthly payments. 
• Refinance: You can always switch to a 15-year loan from a 30-year mortgage when the federal interest rate drops or your income increases. Calculate the cost to refinance and confirm you will break even or save money on the project. 

Play around with a 30-year mortgage calculator online and see how rates compare to 15-year options. You may prefer the safety of a 30-year loan while tapping into these options to reduce your principal balance.

Regional Market Considerations

Your housing market might also determine whether a 15-year vs. 30-year mortgage is better. In high-cost-of-living (HCOL) areas, even a small mortgage interest rate change can make a big difference in monthly payments. However, the principal spread across 15 years instead of 30 years could also be higher than you can afford.

Additionally, different property tax rates, home insurance costs, and the prevalence of HOAs can also affect your budget. Two buyers with the same home price and interest rate may have different monthly costs based on local expenses. If you use a 30-year mortgage calculator, add your address so you can get an estimate for your total monthly payment and review what costs you can expect. This is another reason to look at the annual percentage rate of a loan, not just the interest rate.

Making Your Decision – Practical Steps

Every person has individual comfort levels with financial concepts, and not every buyer has a clear long-term plan for their money, income growth, and investments. Here are a few steps you can take to determine your home budget and decide whether a 15-year or 30-year fixed-rate loan is right for you. 

• Estimate your down payment: Consider how much you can put into the house while setting aside an emergency fund and money for home repairs. 
• Calculate your DTI: Evaluate your debt versus taxable income and determine what a 28% DTI and 36% DTI look like. This gives you an idea of your maximum monthly payment. 
• Determine your maximum loan amount: Based on your monthly payment, calculate what your loan size could be for both a 15-year and 30-year mortgage. Don’t forget to include mortgage insurance, taxes, and other costs in your estimates. This is where an online mortgage calculator is useful.  
• Test different scenarios: Life can get in the way of your financial goals. Consider what would happen if your income drops, home values fall, or new expenses arise (like a baby that needs childcare). How much would these events affect your ability to pay your mortgage? 

If possible, consult with mortgage professionals and financial advisors to discuss your options. A mortgage lender can tell you how much they would reasonably allow you to borrow, while a financial advisor will help you understand how this decision affects your overall financial planning. Their advice can help you determine which loan options are right for your current needs while protecting you for the future. 

FastExpert’s agent network can also provide connections to trusted local lenders who understand regional market dynamics, along with Realtors who can offer their expertise. 

Use FastExpert When You’re Ready to Buy

While 15-year mortgages offer substantial interest savings and faster equity building, they’re not universally superior. The right choice depends on individual circumstances, including income stability, life stage, risk tolerance, and competing financial goals.

Accurately estimating your mortgage interest rate is essential when buying a home. This determines how much you will pay each month and how much house you can afford. Knowing your expected interest rate, DTI, and budget will make navigating the mortgage application process easier. 

Once you have your finances in order, turn to FastExpert. You can find real estate professionals in your area who specialize in finding homes within your budget. They can review your mortgage interest calculations to confirm they are accurate and recommend properties you might like. FastExpert makes buying a home easier because you can find trusted Realtors to support your goals. Find an agent today and start your home search.