Compare the long-term costs of a 15 year mortgage vs 30 year mortgage with this calculator. While a 30-year loan offers lower monthly payments, a 15-year loan can save you tens of thousands of dollars in interest.
Mortgage Comparison
15 Year vs 30 Year Mortgage Calculator Formula
To compare these loans, we calculate the monthly amortization for both terms independently and then subtract the total interest costs. The core formula used for both is:
Total Interest = (M * n) – P
Variables
- P: Loan Principal Amount.
- i: Monthly Interest Rate (Annual Rate / 12). Note that 15-year rates are typically lower than 30-year rates.
- n: Total Number of Payments (180 for 15-year, 360 for 30-year).
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What is the Difference Between 15 and 30 Year Mortgages?
The 15 year mortgage vs 30 year mortgage calculator highlights the trade-off between monthly cash flow and total cost. A 30-year mortgage spreads payments out over a longer period, resulting in a lower monthly bill but significantly higher interest costs over the life of the loan.
Conversely, a 15-year mortgage requires higher monthly payments because you are paying down the principal faster. However, lenders typically offer lower interest rates for 15-year terms, and the shorter duration means you pay far less interest in total—often saving 50% or more on interest costs.
How to Calculate the Savings
- Calculate 30-Year Cost: Determine the monthly payment using the 30-year interest rate and 360 payments. Multiply the payment by 360 to get the Total Cost.
- Calculate 15-Year Cost: Determine the monthly payment using the 15-year interest rate and 180 payments. Multiply the payment by 180 to get the Total Cost.
- Find the Difference: Subtract the Total Cost of the 15-year loan from the Total Cost of the 30-year loan. The result is your Total Interest Savings.
Frequently Asked Questions (FAQ)
It depends on your goals. If you want the lowest monthly payment to maximize cash flow, choose 30 years. If you want to build equity fast and save on interest, choose 15 years.
Yes. You can take a 30-year loan (for flexibility) and make extra principal payments to pay it off in 15 years. However, you might have a slightly higher interest rate than a true 15-year loan.
Typically, 15-year payments are about 40-50% higher than 30-year payments for the same loan amount, depending on the interest rate spread.
Yes, historically, 15-year fixed mortgage rates are 0.25% to 0.75% lower than 30-year fixed rates because they are lower risk for the lender.