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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.

Priority

15-Year Mortgage Loan

30-Year Mortgage Loan

I want a lower interest rate.

X

I want lower monthly payments.

X

I want to build equity faster and fully own my home sooner.

X

I want to pay less money over the life of the loan.

X

I want more flexibility in how much house I can afford.

X

I want to be able to qualify for a larger loan amount.

X

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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