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What's Best: A 15-Year or 30-Year Mortgage?

Deciding between a 15-year or 30-year mortgage requires plenty of consideration. Learn more about their differences and which could be your best fit.

Deciding which mortgage loan is the best to pursue requires a great deal of comparison, understanding, and weighing options against your current financial circumstances.

When it comes to understanding the differences between a 15-year or 30-year mortgage, you need to get clear on the benefits of each, as well as what can best fit your own unique needs.

What’s the Real Difference Between a 15-Year or 30-Year Mortgage?

While the difference between these two types of mortgage is made evident in their names — one is a 15-year duration, while the other is a 30-year duration — there are also differences in how the life of each of these loans actually translates to your own bottom line.

A young couple review the terms of a mortgage agreement with their lender prior to signing.
Ensure you review all terms of your mortgage agreement with your lender before signing.

While both mortgage types are considered to be fixed-rate mortgages, meaning you’ll lock in the interest rate for your mortgage loan for the entirety of its duration, each has its own rate by design. The amount of the interest rate is a key deciding factor when weighing which of these two mortgage loans to pursue, as it’ll define your monthly payment.

Taking Out a 30-Year Mortgage

Taking out a 30-year fixed-rate mortgage loan is the most traditional route for home buyers. The biggest appeal? You can get the added benefit of a lower monthly payment. Because you have a longer timeframe to pay your mortgage loan, your monthly payments are reduced.

However, 30-year mortgage loans come with a higher interest rate than their 15-year counterparts. This is due to the fact lenders consider a longer time frame for a mortgage loan to be repaid as a risk.

Taking Out a 15-Year Mortgage

On the other hand, a 15-year mortgage is shorter in duration, so your monthly payments will be higher. It may seem counterintuitive to pay more per month — what’s the benefit of going the route of this type of mortgage?

15-year mortgage loans, by design, come with a lower interest rate since lenders deem a shorter repayment time frame as less of a risk. And, because you’re shaving down the period of time you owe on your mortgage loan, you’re paying less interest over time. Put simply, the life of the loan is shorter; thus, it has less of a timeframe to accrue more interest.

Even though you would pay more on a monthly basis with this type of loan, you’d actually end up saving more money in the long run.

Which Mortgage Term is Right for Me?

Having a deep and honest understanding of your current financial standing will help you determine which mortgage term is the best fit for you and your needs. When choosing whether or not to go for taking out a 15-year or 30-year mortgage, there are key factors you need to consider.

A young couple using a laptop celebrate after receiving favorable mortgage terms.
Your annual income, credit, DTI, and more dictate your mortgage eligibility, and depending on these you may not qualify for certain mortgage terms.

First, you must evaluate where you currently are financially as you prepare to secure a mortgage loan to purchase a home. What does your gross income look like? What is your debt-to-income ratio? How much cash do you currently have on hand, and do you expect to have additional cash in the future?

Evaluating and answering each of these questions can help you prepare to understand which mortgage term is the best for you and your financial needs. The difference in the durations of both mortgages directly impacts your monthly payments, as well as what you pay on your mortgage in the long-run.

A 15-year mortgage might be a good fit for you if:

  • Your personal monthly budget leaves comfortable room for you to make higher monthly payments on your mortgage loan
  • You’re not particular about the type of home you want to purchase — the higher monthly payment of a 15-year mortgage means you’ll qualify for a smaller loan
  • You’re determined to own your home outright in 15 years

A 30-year mortgage might be a good fit for you if:

  • You want the comfort and flexibility of a lower monthly mortgage loan payment
  • You’re interested in a more expensive type of home — 30-year mortgage loans have lower monthly payments, so you can qualify for a larger loan
  • You want the ability to save up for other financial goals while also paying off your mortgage loan
  • You’re comfortable spending more time building equity

Determining which of these two mortgages is the best fit for you requires a clear, realistic understanding of your financial footing in its current state as well as the long-run, along with your long-term goals.

Don’t let either of these mortgage types intimidate you or hold you back from finding the right home for you. If you’re still unsure which mortgage type is the best fit, or how either one can line up with your homebuying goals, get in touch with a professional real estate agent.

Finding a top agent is easier than ever — connect with one in your local area today on They’re here to help guide and support you through the buying process, no matter what options you’re weighing.

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