Pros and Cons of a 15-Year Mortgage

Pros of a 15-year mortgage

A 15-year mortgage can be beneficial for borrowers who can afford higher monthly payments and are dedicated to paying down their mortgage as quickly as possible. Here are the advantages of a 15-year mortgage.

Pay less interest

In general, a shorter mortgage term means less interest. Because you’re making higher payments, more of your money goes toward your principal balance, which accrues less interest than a 30-year mortgage.

For example, with a $300,000 principal balance for a 15-year mortgage at an average 5.5% interest rate, you’d pay $16,169 in interest the first year and $857 in the last year, with a total of $141,225 in interest.

With a 30-year mortgage, you’d pay almost twice as much in interest, even at the same rate — a total of $313,212.

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Build equity faster

With a 15-year mortgage, interest doesn’t have time to accrue as much over the loan’s terms, meaning you build equity faster. With the same example above, your principal balance is $247,622 at the end of year 10 with a 30-year mortgage, but $128,329 with a 15-year mortgage.

If your home’s value stays steady at $380,000, you’ll have a little over 66% equity in your home with a 15-year mortgage. If you had a 30-year mortgage, that equity is only about 35%.

Potentially lower interest rates

According to Freddie Mac, average fixed mortgage rates are 6.23% for a 30-year term and 5.51% for a 15-year term in December 2025. Over the life of your loan, that 0.72% difference can add up.

Lenders generally offer lower rates for shorter terms because it’s a lower risk: You’re agreeing to pay off the loan faster, thus paying more money toward your principal balance and building more equity in your home. This can also decrease the risk of becoming underwater on your mortgage.

Cons of a 15-year mortgage

While refinancing a 30-year mortgage to a 15-year one can be a popular way to get a lower interest rate and build equity faster, buying a home with a 15-year mortgage off the bat can have serious drawbacks.

Higher monthly payments

The main drawback of a 15-year mortgage is the higher monthly payment, which directly affects the rest of your finances and eligibility for lending.

Back to our example of a $300,000 mortgage at a 5.5% interest rate. Not accounting for taxes or insurance, your monthly payment is $1,703 with a 30-year mortgage and $2,451 with a 15-year mortgage.

And this payment only increases as your loan amount increases. With the average home sales price at more than $500,000 throughout 2025, a 20% down payment on a typical home leaves you with a $400,000 original mortgage balance, pushing those monthly payments higher.

Less savings

Because you have higher monthly payments, the rest of your finances and savings may suffer. You won’t have as much room in your budget to save for emergencies, family planning or retirement.

It’s important to balance your long-term savings and homeownership goals. If a higher monthly payment for less interest over your mortgage terms puts you in a tough spot with retirement or emergencies, then consider a 30-year mortgage.

Stricter DTI requirements

Your debt-to-income ratio (DTI) is an important part of your borrower profile. Generally, lenders like to see your monthly debt payments making up 36% or less of your monthly income.

Because 15-year mortgages have higher monthly payments, it could easily push your DTI ratio past this threshold.

If your DTI is higher — close to 50% — it can be difficult to qualify for other lending products like auto loans and personal loans. It can even affect your ability to refinance your mortgage in the future.

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30-year mortgage vs. 15-year mortgage comparison

So, should you get a 15-year mortgage over a 30-year mortgage, knowing all the pros and cons of a 15-year home loan term? Here’s a quick comparison of their main features, using the $300,000 loan amount example.

Choosing between a 30- and 15-year mortgage

If you’re still choosing between these loan terms, consider the following:

• Debt-to-income ratio: Would getting a 15-year mortgage push your DTI above 36% to 43%? If so, consider a 30-year mortgage instead.
• Your earning potential: If you and potentially your spouse expect your income to increase or at least stay steady for the foreseeable future, then affording the monthly payments of a 15-year mortgage could be possible.
• Retirement savings goals: Staying on top of your retirement funds is important, so you don’t want to sacrifice saving for your later years to get a break on interest. Make sure you can still afford to save for retirement before choosing a 15-year mortgage.

Learn more about choosing a 30-year or 15-year mortgage and their pros and cons in our guide.