Transparent method
The formula
Worked example
Example inputs
How to interpret the result
A shorter term usually comes with a lower rate and a much higher payment, and the choice is a trade between monthly cash flow and lifetime interest. On $340,000, a 15 year loan at 5.9 percent costs about $702 more each month than a 30 year loan at 6.5 percent, and it saves about $260,511 in interest. Whether the higher payment is worth it depends on what the extra $702 would do elsewhere, such as clearing debt at a higher rate or building reserves.
Before you rely on it
What to check
Confirm you can carry the shorter payment with a job loss or a repair bill in the picture. A payment you can barely make is a risk that the interest saving does not cover.
The common error
Where people go wrong with 15 vs. 30 year mortgage calculator
Comparing only the two payments. The interest total, the rate gap and the alternative use of the difference all belong in the comparison.
Sensitivity evidence
How loan amount changes the long-term extra interest
| Loan amount | Long-term extra interest | Short-term extra monthly payment |
|---|---|---|
| $272,000 | $208,409 | $561 |
| $306,000 | $234,460 | $632 |
| $340,000worked example | $260,511 | $702 |
| $374,000 | $286,563 | $772 |
| $408,000 | $312,614 | $842 |
Every input, tested
Which input moves the long-term extra interest most
| Input | Tested from | To | Long-term extra interest at each end | Swing |
|---|---|---|---|---|
| Long term | 22.0 years | 38.0 years | $126,794 to $404,825 | $278,031 (107%) |
| Long-term rate | 5.5% | 7.5% | $181,834 to $342,699 | $160,865 (62%) |
| Short term | 11.0 years | 19.0 years | $310,664 to $207,447 | $103,216 (40%) |
| Short-term rate | 4.9% | 6.9% | $292,868 to $226,984 | $65,883 (25%) |
| Loan amount | $306,000 | $374,000 | $234,460 to $286,563 | $52,102 (20%) |
Two variables at once
Long-term extra interest by loan amount and short-term rate
| Loan amount \ Short-term rate | 3.9% | 5.9% | 7.9% |
|---|---|---|---|
| $272,000 | $259,218 | $208,409 | $153,856 |
| $306,000 | $291,621 | $234,460 | $173,088 |
| $340,000 | $324,023 | $260,511 | $192,320 |
| $374,000 | $356,425 | $286,563 | $211,552 |
| $408,000 | $388,828 | $312,614 | $230,784 |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Loan amount | $340,000 |
| Short-term rate | 5.9% |
| Short term | 15.0 years |
| Long-term rate | 6.5% |
| Long term | 30.0 years |
| Long-term extra interest | $260,511 |
| Short-term extra monthly payment | $702 |
Where the inputs come from
Enter the same loan amount for both terms. The 15-year rate is normally lower than the 30-year rate; check with a lender for the current gap for your credit, since the example numbers are only a starting point. Compare on the same day and with the same points and fees so the difference reflects term alone.
Using the long-term extra interest in a real decision
That hedge costs the rate difference.
When the result stops applying
The comparison ignores what you would do with the money not used for the higher payment. If the freed-up amount would otherwise go to a retirement account with an employer match or to paying off high-rate debt, the longer loan can be the better choice. The tool also ignores taxes, insurance and PMI, which do not depend on the term.
What to compare it with
Take the higher payment and ask what else it would fund. If the answer is retirement contributions with a match, an emergency fund or higher-rate debt payoff, the 30-year loan is likely better for now. If nothing competes for the money, the 15-year saves a large amount of interest. The 15-year, 20-year and 30-year calculators give each payment separately, and the extra mortgage payment calculator shows how a 30-year loan behaves when you pay more.
People also ask
Frequently asked questions
Which is better, 15 or 30 years?
The 15-year saves interest and builds equity fast. The 30-year keeps payments lower and gives flexibility. The right choice depends on cash flow and other goals.
Why is the 15-year rate lower?
A 15-year loan is repaid faster, so the lender is exposed to interest-rate and credit risk for half as long and charges less for it. The example uses a 0.6-point gap, but the real spread changes with the market.
Can I pay a 30-year like a 15-year?
Yes. You can add principal every month to a 30-year loan and pay it off on a 15-year schedule, but you keep the higher 30-year rate. The benefit is that you can drop back to the lower required payment if money gets tight.