Choosing a 15-Year or 30-Year Mortgage Loan

Deciding between a 15-year or 30-year mortgage really depends on your situation and your financial goals.

As the name implies, with a fixed rate mortgage, the interest rate is set at the time you take out the mortgage and remains constant over the life of the mortgage. The monthly payment level also remains constant. Knowing what your payment will be can be reassuring.

Each monthly payment is comprised of interest and principal with early-year payments being primarily interest and payments toward the end of the mortgage being mostly principal. The benefit of the shorter 15-year mortgage is that after 15 years you will have paid off the mortgage loan and you own your home free and clear. You will also pay less interest over the life of the mortgage. The downside is that your monthly payments will be higher.

Example: Comparing 15-Year & 30-Year Mortgages


15-year mortgage

30-year mortgage

Mortgage amount



Interest rate



Monthly principal’s interest payments



Total monthly payments over the term of the mortgage



Total principal paid over the term of the mortgage


$ 100,000.00

Total interest paid over the term of the mortgage




When shopping for a mortgage, be sure to consider the rate and the term. The interest rate on a 15-year mortgage may be a bit lower than the rate on a 30-year mortgage, even from the same institution.

Choosing the term of a fixed rate mortgage is usually a function of what level of monthly payments you can afford, how anxious you are to pay off the entire mortgage and any rate difference with the different terms.

This content is intended to serve as a general guideline.