15 vs 30 Year Mortgage Calculator

How it works

Each loan's payment comes from the standard amortization formula at its own rate and term. A shorter term has a higher payment but usually a lower rate, and because the balance falls faster, it pays far less interest in total.

Principal repaid after N years is how much of the loan each option has paid off by then: the equity the payments have built, before any change in the home's value.

The investing comparison asks what happens if you take the longer term and invest the payment difference every month at the return you enter. After N years, the longer-term borrower has that investment but still owes more on the mortgage. The last result is the investment minus that extra balance: positive means the longer term plus investing came out ahead under your return assumption, negative means the shorter term did.

Formula

r = annual rate ÷ 12        n = years × 12
payment  = paymentForLoan(P, r, n)              for each term
interest = payment × n − P
balance after m months = P × (1 + r)^m − payment × ((1 + r)^m − 1) ÷ r
invested = futureValueOfSeries(payment gap, return ÷ 12, N × 12)
longer term ahead by = invested − (longer balance − shorter balance)

Example

A $320,000 loan costs $2,614.67 a month over 15 years at 5.5%, or $1,970.30 over 30 years at 6.25%, a difference of $644.37. Total interest is $150,640.07 on the 15-year loan and $389,306.21 on the 30-year loan, so the shorter term saves $238,666.15.

After 15 years the 15-year loan is paid off, while the 30-year loan still owes $229,792.69 (it has repaid $90,207.31). Investing the $644.37 difference every month at an assumed 6% would grow to $187,395.44, which is $42,397.25 short of the extra balance; under these assumptions the 15-year loan comes out ahead.

Assumptions and limitations

• Both rates are fixed for their whole terms and payments are monthly. The rates are inputs you enter; quotes for 15- and 30-year loans differ by lender and day.
• The investment return is an assumption you choose, not an expectation; it is applied every month with no taxes, fees or losses. Real returns vary and can be negative, while the interest saved on a shorter loan is certain.
• The comparison runs until the shorter loan is paid off at the latest. Taxes, insurance, mortgage insurance, closing costs and any mortgage-interest tax deduction are not included.
• If the shorter term's payment is lower than the longer term's, the payment difference is negative and the invested figure is negative.
• Results are estimates for planning and are not financial, tax or legal advice.

Frequently asked questions