Published: 2026-10-19
A 15-year mortgage pays the same loan off in half the time of a 30-year loan, so the monthly principal and interest is higher and the total interest is lower. A 30-year mortgage keeps that monthly payment smaller and leaves a larger balance for longer.
The Consumer Financial Protection Bureau says the term changes the monthly principal and interest, the rate you are offered, and the interest you pay over the life of the loan. The example below holds the rate still so you can see the term by itself. It is an illustration, not a quote.
What does the loan term change?
The term is how long you have to repay the loan. The CFPB lists 15 years and 30 years as the common choices, and other terms are possible.
A shorter term raises the monthly principal and interest because the same principal is split into fewer payments. It also shortens the time interest accrues. The CFPB says shorter terms generally save money overall for two reasons. You borrow and pay interest for less time. The interest rate is usually lower, by as much as a full percentage point. How large that gap is depends on the lender and the file. The bureau says rates vary among lenders, especially on shorter terms, and it tells shoppers to compare Loan Estimates.
On a fixed-rate note, the interest rate and the principal-and-interest payment stay the same for the life of that loan. The CFPB says the total monthly draft can still change if property taxes, homeowners insurance, or mortgage insurance change. That is true on both a 15-year and a 30-year fixed loan.
A rate that can reset later is a different product. See adjustable-rate versus fixed-rate mortgages.
How do the payments compare at one rate?
The CFPB says lenders calculate principal and interest with a standard formula from the loan amount, the term, and the interest rate, so a typical fixed-rate loan is paid off at the end of the term if every payment is made.
The monthly payment is the loan amount times r times (1+r) to the n, divided by (1+r) to the n minus 1. The monthly rate r is the annual rate divided by 12. The count n is the number of months.
Worked example, illustrative only. Use a $300,000 loan at an illustrative 6% rate, not a quote. The monthly rate is 0.005. A 15-year loan has 180 payments. A 30-year loan has 360. The formula payment, rounded to the nearest cent, is what the table uses. Each month's interest is the prior balance times 0.005, rounded to the cent. The last payment changes by a few cents so the balance lands on zero. Nothing here is a current market rate, a lock, or an APR.
| 15-year | 30-year | |
|---|---|---|
| Monthly principal and interest | $2,531.57 | $1,798.65 |
| Total of all payments | $455,682.79 | $647,515.44 |
| Total interest | $155,682.79 | $347,515.44 |
| Balance after 5 years | $228,027.33 | $279,163.14 |
| Principal paid in those 5 years | $71,972.67 | $20,836.86 |
| Interest paid in those 5 years | $79,921.53 | $87,082.14 |
The 15-year payment is $732.92 higher each month. Over the full terms, it pays $191,832.65 less interest. After five years, principal paydown is $51,135.81 higher on the 15-year loan.
The five-year lines add up. On the 15-year loan, $79,921.53 of interest plus $71,972.67 of principal equals $151,894.20, which is $2,531.57 times 60. On the 30-year loan, $87,082.14 plus $20,836.86 equals $107,919.00, which is $1,798.65 times 60.
Those totals assume you keep the loan, the rate never changes, and you add no extra principal. Sell or refinance earlier and you do not collect the full-term interest gap. The early years still build more equity on the shorter term, because more of each payment is principal.
Rerun your own loan amount in the mortgage calculator. Use the rate from a Loan Estimate, not this 6% illustration.
Why is the same rate an incomplete comparison?
The table holds the rate still so the term is the only change. The CFPB says a 15-year loan typically carries a lower rate than a 30-year loan, by as much as a full percentage point, and that the size of the gap depends on the specifics.
A lower rate on the shorter term would widen the interest gap and shrink the monthly gap versus the table. You only know your gap when both Loan Estimates are from the same day, with the same points and the same loan amount.
The interest rate is the yearly cost of borrowing and does not include fees. The CFPB says the APR also reflects points, mortgage broker fees, and other charges to get the loan, so the APR is usually higher than the rate. A lower rate that costs more points is a different trade. See how to compare mortgage offers, points, and APR.
What else sits in the monthly payment?
Principal and interest is one line. The CFPB says the amount you send the mortgage company is often higher because it includes homeowners insurance and taxes.
Mortgage insurance can change the comparison too. A smaller down payment often brings private mortgage insurance on a conventional loan. That premium follows the loan, not the term you picked. A shorter term builds principal faster, which can matter for cancellation later, and the cancellation rules depend on the loan. Read how much down payment you really need and, for the insurance piece alone, the PMI calculator.
Budget the higher 15-year draft against the rest of the month. If that payment only works when nothing else goes up, the lower 30-year payment leaves more room for taxes, insurance, and ordinary bills. You can still send extra principal on a 30-year loan. Extra principal shortens the payoff only if the servicer applies it to principal and you keep sending it.
How should you line the two offers up?
Ask for a 15-year fixed Loan Estimate and a 30-year fixed Loan Estimate on the same loan amount, the same points, and the same lock period. Write down principal and interest, the full monthly payment, cash to close, and total interest from each form.
The CFPB says a lot depends on the specifics and tells you to compare official Loan Estimates. A national average is context. It is not the price of your loan.
Once you have a written rate, run both terms in the mortgage calculator. If one offer can reset, read adjustable-rate versus fixed-rate mortgages.
A temporary payment subsidy sits beside the loan term choice. See 2-1 Buydowns Explained: How Temporary Buydowns Work.
A lump-sum principal payment can lower the required payment without a new loan. See Mortgage Recast vs Refinance: Which Fits Your Situation.
This article is educational and is not a loan offer or financial advice.
Sources
- Consumer Financial Protection Bureau, Understand the different kinds of loans available (loan term, payment, and total interest) - https://www.consumerfinance.gov/owning-a-home/explore/understand-the-different-kinds-of-loans-available/
- Consumer Financial Protection Bureau, How do mortgage lenders calculate monthly payments? - https://www.consumerfinance.gov/ask-cfpb/how-do-mortgage-lenders-calculate-monthly-payments-en-1965/
- Consumer Financial Protection Bureau, What is the difference between a mortgage interest rate and an APR? - https://www.consumerfinance.gov/ask-cfpb/what-is-the-difference-between-a-mortgage-interest-rate-and-an-apr-en-135/