Comparing a 15-year vs. 30-year mortgage is a critical decision in home financing. Use this calculator to analyze monthly payments, total interest costs, and long-term savings to find the best fit for your financial goals.
15 vs 30 Year Mortgage Calculator
| Monthly Savings (30-yr) | $0.00 |
| Interest Savings (15-yr) | $0.00 |
15 vs 30 Year Mortgage Calculator Formula:
Source: Bankrate | Investopedia
Variables:
- M (Monthly Payment): The amount you pay each month.
- P (Principal): The total loan amount borrowed.
- i (Monthly Interest Rate): Annual rate divided by 12 months.
- n (Number of Payments): Total months (180 for 15-year, 360 for 30-year).
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What is 15 vs 30 Year Mortgage Calculator?
The 15 vs 30 year mortgage calculator is a financial tool designed to help homebuyers compare the two most popular mortgage terms in the United States. While the 30-year mortgage offers lower monthly payments by spreading the debt over a longer period, it results in significantly higher interest costs over the life of the loan.
A 15-year mortgage, conversely, requires a higher monthly commitment but features lower interest rates and allows you to build home equity twice as fast. This calculator highlights the “trade-off” between monthly cash flow and long-term wealth building.
How to Calculate 15 vs 30 Year Mortgage (Example):
- Enter your Loan Amount (e.g., $400,000).
- Input the Interest Rate for the 30-year term (e.g., 7%) and the 15-year term (e.g., 6%).
- The tool calculates the monthly payment for both terms using the standard amortization formula.
- Total interest is found by: (Monthly Payment × Total Months) – Principal.
- Compare the difference to see how much you save in interest vs. how much more you pay monthly.
Frequently Asked Questions (FAQ):
Is a 15-year mortgage always better? It depends on your budget. If the higher payment prevents you from investing elsewhere or creates financial stress, a 30-year mortgage might be safer.
Why is the interest rate lower on a 15-year mortgage? Lenders view shorter-term loans as less risky because the principal is paid back faster, and they are less exposed to long-term inflation.
Can I pay off a 30-year mortgage in 15 years? Yes, most mortgages allow extra principal payments. This gives you the flexibility of a 30-year payment with the savings potential of a 15-year term.
What is the biggest advantage of a 30-year term? Increased purchasing power. Because the monthly payments are lower, you may qualify for a more expensive home.