15-Year and 30-Year Mortgages – What’s the Difference?
Is a 15- or 30-year mortgage best for you? We can help you decide.
Let’s start with a 15-year mortgage.
These loans help you build equity fast, paying off the home in just 15 years.
The interest rate is typically lower than a 30-year mortgage, which could mean paying around $120,000 less in interest on a $350,000 loan with a 15-year.
That means more money in your pocket.
But to pay off a loan in half the time, you’ll have higher monthly payments which may tighten your monthly budget and limit your home options.
It also makes these loans a little harder to qualify for.
That’s why 30-year mortgages are appealing for many buyers.
The monthly payments are lower than with a 15-year, which gives you more flexibility in how much house you can afford.
And they’re generally easier to qualify for than 15-year mortgages.
But they have higher interest rates, and more of your payments go toward interest.
That means it will take longer to build up equity than a 15-year mortgage.
So, if you don’t mind making higher monthly payments, you can pay off a home faster with a 15-year mortgage.
Or if you need a bigger home or more financial flexibility, consider a 30-year mortgage.
If you need help choosing which loan is right for you, contact a KeyBank Mortgage Loan Officer.
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The difference between a 15-year and 30-year fixed-rate mortgage loan goes beyond the time it takes to pay them off. Which one makes the most sense for you? Use this guide to help you decide.
15-Year Mortgage
You’ll build equity fast with a 15-year loan and pay off the home in only 15 years. Compared to a 30-year loan, the interest rate is typically lower – which could mean paying significantly less in interest over the life of the loan.
But paying off the loan in half the time means you’ll have higher monthly payments. This may tighten your monthly budget and limit your home options. The bigger payments can also make it harder to qualify for these loans.
Pros:
- Build equity faster
- Shorter path to full homeownership
- Lower interest rate and shorter life span equal longer-term savings
Cons:
- Tighter range of home affordability
- Larger monthly payments
- Harder qualification
If you can qualify and afford the higher monthly outlay, then the 15-year mortgage can be a great way to save money when you buy a home.
Total Interest on Sample Loan Amounts with 10% Down Payment1
Loan amount |
$200K |
$350K |
$500K |
|---|---|---|---|
30-year loan at 3.6% APR |
$114,611 |
$200,569 |
$286,527 |
15-year loan at 3.1% APR |
$45,310 |
$79,293 |
$113,275 |
30-Year Mortgage
The 30-year loan is appealing to many homebuyers because monthly payments are lower than with a 15-year loan. This offers more flexibility in how much house you can afford. Plus, you’ll find them generally easier to qualify for.
Interest rates are higher, though, and more of your payments go toward interest. That means it will take longer to build up equity than with a 15-year mortgage, and you’ll pay more on interest over the life of the loan.
Pros:
- Easier qualification
- Lower and easier-to-manage monthly payments
- More house for the mortgage
Cons:
- Higher interest rate
- Slow to build equity
- More of the payments go toward interest
If you need a bigger home or more financial flexibility, then the 30-year loan could be a good option. And if your financial situation improves, then you may be able to refinance to a shorter term later.
Monthly Loan Payments on Sample Loan Amounts with 10% Down Payment1
Loan amount |
$200K |
$350K |
$500K |
|---|---|---|---|
30-year loan at 3.6% APR |
$818 |
$1,432 |
$2,046 |
15-year loan at 3.1% APR |
$1,252 |
$2,191 |
$3,129 |
The Right Choice for You
Which loan will serve you best? Let your priorities help you decide.
Still have questions about types of loans?
For more personalized recommendations, use the KeyBank mortgage payoff calculator or mortgage qualification calculator. To learn more, talk with a mortgage loan officer (MLO) or visit our Financial Wellness Center.
NOTE: Payment examples and total interest expense examples are provided for illustrative and informational purposes only. This does not constitute a commitment to lend on the terms listed, nor do the interest rates utilized in the examples reflect interest rates currently offered by KeyBank. Payment amounts do not include taxes and/or insurance, and may be greater than the amounts shown. Examples for a 30-year loan include 360 payments at 3.6% APR and a 10% down payment. Examples for a 15-year loan include 180 payments at 3.1% APR and a 10% down payment.
NOTICE: This is not a commitment to lend or extend credit. Conditions and restrictions may apply. Information and offers are subject to change without notice. All loans are subject to credit and collateral approval. Not all loans or products are available in all states.
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