15-Year vs 30-Year Mortgage — Which Is Right for You?
The 15-year mortgage isn’t for everyone. While it offers a faster path to paying off your home and significantly reduces the total interest paid, the higher monthly payment can be a major hurdle. Many buyers choose the 30-year mortgage for its affordability and flexibility, with the option to make extra payments if they want to accelerate payoff.
The 30-year mortgage continues to dominate the U.S. market, accounting for nearly 88% of loans as of late 2024, while the 15-year sits at just over 4%. A decade ago, 15-year loans held more than triple that market share. Rising home prices and interest rates in recent years have only strengthened the preference for lower monthly payments.
However, when comparing the two, the long-term cost difference is substantial. For example, on a $450,000 home with 20% down, a 30-year loan at 6.75% results in a monthly principal and interest payment of around $2,300 and total interest of roughly $819,000. A 15-year loan at 5.92% pushes the monthly payment closer to $3,000, but total interest drops dramatically to about $538,000.
On a $1 million home, the gap is even more pronounced. The 15-year payment may be $2,000 higher each month, but it can save nearly $300,000 in interest over the life of the loan.
For many, the challenge of the 15-year loan is the upfront affordability. The higher monthly obligation can limit financial flexibility, making it harder to invest elsewhere or cover unexpected expenses.
One common strategy for 30-year borrowers is to make biweekly payments or add extra principal to each payment. This can shorten the loan term by years without locking into a higher required payment. Another option is to apply bonuses, raises, or windfalls directly to principal, combining the best of both worlds—lower required payments with the ability to pay off faster.
Some buyers opt for a 20-year loan, which offers a lower rate than a 30-year and a shorter payoff timeline, while keeping the monthly payment more manageable than a 15-year.
Ultimately, the right mortgage term depends on your financial priorities. If your goal is to be debt-free as quickly as possible and you can comfortably handle the higher payment, a 15-year loan can be a powerful wealth-building tool. If flexibility and cash flow are higher priorities, a 30-year loan with a disciplined prepayment plan might be the smarter choice.
If you’re considering buying, refinancing, or simply want to explore which mortgage strategy is best for you, I’d love to connect! I can walk you through the numbers, introduce you to trusted lenders, and help you make the choice that fits your life and future plans.
