interest paid on 30 year mortgage calculator

Principal and interest are calculated by using the purchase price of the home, subtracting the down payment, and then adding the interest rate. Make a note of the interest rate, the loan amount and the terms of payment. · Multiply 30 -- the number of years of the loan -- by the number of payments you. In our example, a loan of $100,000.00 for 30 years at 6% will yield a payment of just less than $600.00 a month for principal and interest. interest paid on 30 year mortgage calculator

: Interest paid on 30 year mortgage calculator

Interest paid on 30 year mortgage calculator
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Interest paid on 30 year mortgage calculator

15-year vs. 30-year Mortgage Calculator

What would your mortgage payment be for a 15 vs. a 30-year loan?

The difference between 15-year mortgages and 30-year mortgages is more than just how long it'll take to pay off your loan. If you choose a 15-year-mortgage at a fixed rate, you'll end up with a larger monthly payment than if you had chosen a 30-year-mortgage, but you'll pay less in interest over the course of your loan.

A 30-year-mortgage is just the opposite: your monthly payments will be smaller, but you'll pay more in interest over the course of the loan. 

Use the mortgage calculator to see which type of loan might be right for you.

How to use the calculator

Using the calculator is easy, but you will need to do some research before you get started. You'll need to know an estimated interest rate for bot the 15-year and 30-year options. Enter both of those numbers along with the mortgage amount. Jamis prime login show you a table with your monthly payment and total interest paid for both options. 

Feel free to play with the calculator to see how much you can save in different downpayment scenarios! 

Can you pay more?

While you'll never best online bank savings rates 2019 less on your monthly mortgage, it is possible to pay more each month. This will help you pay off your mortgage more quickly and pay less in interest over time. You can do this monthly or whenever you have a windfall, like a bonus at work or a gift from family. ​

Amortization Table

The amortization table in the calculator will break down how much you'll pay in principal and interest each month. Remember, your mortgage payments are front-loaded with interest payments, which means the bulk of your monthly payment in the early years goes to interest. Eventually, you'll reach a point where you're paying more in principal than interest. 


When Americans borrow money with which to buy a home, the most commonly used loan is the 30-year fixed-rate mortgage, with more than 80% of homebuyers opting for it. Thirty-year mortgages have some definite pluses, but there are some meaning drawbacks, as well.

Here are four reasons why you might want to consider some alternatives to the standard 30-year mortgage. See if they make sense to you and keep them in mind whenever you start the process of getting preapproved and then approved for a mortgage -- or a refinancing!

Button of mortgage text on red keyboard in closeup

Image source: Getty Images.

Reason No. 1 to avoid a 30-year mortgage: It's costly

The main reason to avoid a 30-year mortgage is because it's costly. You'll typically pay more than twice as much in interest over the life of the loan with a 30-year loan as with a 15-year one. That, of course, is because the loan is lasting a long time.

Many people favor longer loans because their monthly payments are lower. That is indeed a factor worth considering. Check out the examples below to appreciate the difference in monthly payments with the two kinds of loans (assuming a 20% down payment in each case). Note that I assigned a interest paid on 30 year mortgage calculator interest rate for the 15-year mortgage because they typically feature lower rates.

Home Price

Loan Amount

15-Year Monthly Payment at 4%

30-Year Monthly Payment at 4.5%





















Source: online calculator.

Clearly, the 30-year mortgage will cost you a lot less each month. But over the life of both loans, it will cost you a lot more -- in interest. Check out the examples below:

Loan Amount

Total Interest Paid with 15-Year Loan at 4%

Total Interest Paid with 30-Year Loan at 4.5%
















Source: online calculator.

Reason No. 2 to avoid a 30-year mortgage: Higher interest rates

Next up: Interest rates. As I mentioned above, you'll generally get higher interest rates taking out a 30-year loan than if you take on a shorter-term one. Per Freddie Mac, the national average interest rate for a 30-year fixed-rate mortgage was recently 4.21%, compared with just 3.42% for a 15-year loan. (Those are up, respectively, from 3.68% and 2.96% a year earlier, showing how rates have been rising.) No matter what mortgage you decide to take on, be sure to compare mortgage rates. A little shopping can turn up better rates than you might have expected.

The word

Image source: Getty Images.

Reason No. 3 to avoid a 30-year mortgage: Slow equity-building

Mortgages let us borrow money from a lender to buy a house and to slowly build equity in that home, as we pay off the loan over many years. With a 30-year mortgage, though, you'll build equity really slowly, as the loan stretches over three decades.

Reason No. 4 to avoid a 30-year mortgage: It lasts 30 years

A final reason to avoid a 30-year mortgage may seem rather obvious: because it lasts 30 years. That might not seem problematic when you take out the loan, but consider your age and your retirement plans. If you're 52 years old and you're considering taking on a 30-year mortgage, note that you'll be 82 when you finally pay it off -- if you make only your expected monthly payments. Most retirees would rather not have mortgage payments hanging over their heads when they're on fixed incomes.

Image source: Getty Images.


A happy compromise

In case you're feeling queasy about having or planning to get a 30-year loan, don't. You can wipe out much of its biggest drawback with a little discipline -- by making extra payments every month or in some other regular fashion. Paying just $100 or $200 more monthly can shave years off your loan and save you gobs of interest dollars, too. Be sure when getting pre-approved for and finalizing any mortgage that you're allowed to make prepayments without penalty.

Another strategy is to buy less home than you can afford, so that your loan is smaller and you can afford the steeper payments of a shorter-term mortgage.

As you deliberate over what kind of mortgage is best for you, consider all the issues above. A 30-year loan might indeed serve you best -- but remember that there are alternatives.

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Mortgage Interest Calculator Canada

When you make a mortgage payment, you are paying towards both your principal and interest. Your regular mortgage payments will stay the same for the entire length of your term, how to check your visa debit card balance the portions that go towards your principal balance or the interest will change over time.

As your principal payments lower your principal balance, your mortgage will become smaller and smaller over time. A smaller principal balance will result in less interest being charged. However, since your monthly mortgage payment stays the same, this means that the amount being paid towards your principal will become larger and larger over time. This is why your initial monthly payment will have a larger proportion going towards interest compared to the interest payment near the end of your mortgage term.

This behaviour can change depending on your mortgage type. Fixed-rate mortgages have an interest rate that does not change. Your principal will be paid off at an increasingly faster rate as your term progresses.

On the other hand, variable-rate mortgages have a mortgage interest rate that can change. While the monthly mortgage payment for a variable-rate mortgage does not change, the portion going towards interest will change. If interest rates rise, more of your mortgage payment will go towards interest. This will reduce the amount of principal that is being paid. This will cause your mortgage to be paid off slower than scheduled. If rates decrease, your mortgage will be paid off faster.

What is a Mortgage Principal?

A principal is the original amount of a loan or investment. Interest is then charged on the principal for a loan, while an investor might earn money based on the principal that they invested. When looking at interest paid on 30 year mortgage calculator, the mortgage principal is the amount of money that you owe and will need to pay back. For example, perhaps you bought a home for $500,000 after closing costs and made a down payment of $100,000. You will only need to borrow $400,000 from a bank or mortgage lender in order to finance the purchase of the home. This means that when you get a mortgage and borrow $400,000, your mortgage principal will be $400,000.

Your mortgage principal balance is the amount that you still owe and will need to pay back. As you make mortgage payments, your principal balance will decrease. The amount of interest that you pay will depend on your principal balance. A higher principal balance means that you’ll be paying more mortgage interest compared to a lower principal balance, assuming the mortgage interest rate is the same.

What is Mortgage Interest?

Interest is charged by lenders in exchange for allowing you to borrow money. For borrowers, mortgage interest is charged based on your mortgage principal balance. The mortgage interest charged is included in your regular mortgage payments. This means that with every mortgage payment, you will be paying both your mortgage principal and your mortgage interest.

Your regular mortgage payment amount is set by your lender so that you’ll be able to pay off your mortgage on time based on your selected amortization period. This is why your mortgage payment amount can change when you renew your mortgage or refinance your mortgage. This can change your mortgage rate, which will impact the amount of mortgage interest due. If you now have a higher mortgage rate, your mortgage payment will be higher to account for the higher interest charges. If you’re borrowing a larger amount of money, your mortgage payment may also be higher due to interest being charged on a larger principal balance.

However, mortgage interest isn’t the only cost that you’ll need to pay. Your mortgage might have other costs and fees, such as set-up fees or appraisal fees, that are necessary to get your mortgage. Since you’ll need to pay these extra costs in order to borrow money, they can increase the actual cost of your mortgage. That’s why it can be a better idea to compare lenders based on their annual percentage rate (APR). A mortgage’s APR reflects the true cost of borrowing for your mortgage.

Mortgage Interest Compounding in Canada

Mortgage interest in Canada is compounded semi-annually. This means that while you might be making monthly mortgage payments, your mortgage interest will only be compounded twice a year. Semi-annual compounding saves you money compared to monthly compounding. That’s because interest will be charged on top of your interest less often, giving interest less room to grow.

To see how this works, let’s first look at credit cards. Not all credit cards in Canada charge compound interest, but for those that do, they usually are compounded monthly. The unpaid interest is added to the credit card balance, which will then be charged interest if it continues to be unpaid. For example, you purchased an item for $1,000 and charged it to your credit card which has an interest rate of 20%. You decide not to pay it off how to find out account number for bank make no payments. To simplify, assume that there is no minimum required payment.

To calculate the interest charged, you’ll need to find the daily interest rate. 20% divided by 365 days gives a daily interest rate of 0.0548%. For a 30-day back at the barnyard cow, you’ll be charged $16.44 interest. Interest is calculated daily but only added once a month. Since you’re not making any payments and are still carrying a balance, your credit card balance for the following month will be $1016.44. As the interest is added to your balance, this means that interest is being charged on top of your existing interest charges. For another 30-day period, you’ll be charged $16.71 interest, which now makes your credit card balance $1,033.15.

The same applies to mortgages, but instead of monthly compounding, the compounding period for mortgages in Canada is semi-annually. Instead of adding unpaid interest to your balance every month like a credit card, a mortgage lender is limited to adding unpaid interest to your mortgage balance twice a year. In other words, this affects your actual interest rate based on the interest being charged.

Mortgage Effective Annual Rate Formula (EAR)

To account for semi-annual compounding, you can calculate your mortgage’s effective annual rate (EAR). The number of compounding periods in a year is two. To use the effective annual rate formula below, convert your interest rate from a percent into decimals.

Mortgage Effective Annual Rate =( 1 +)2 - 1

For example, if your mortgage lender quotes a mortgage rate of 3%, then your effective annual rate will be:

( 1 +)2 - 1 = 0.030225 = 3.0225%

If your mortgage lender quotes a mortgage rate of 5%, then your effective annual rate will be:

( 1 +)2 - 1 = 0.050625 = 5.0625%

This calculation assumes that interest will be compounded semi-annually, which is the law for mortgages in Canada. For a more general formula for EAR:

Effective Annual Rate =( 1 +)n - 1

Where “n” is the number of compounding periods in a year. For example, if interest is being compounded monthly, then “n” will be 12. If interest is only compounded once a year, then “n” interest paid on 30 year mortgage calculator be 1.

How to calculate mortgage interest

To calculate interest paid on a mortgage, you will first need to know your mortgage balance, the amount of your monthly mortgage payment, and your mortgage interest rate. For example, you might want to calculate mortgage interest for a mortgage of $500,000 with monthly payments of $2,500 at a 3% mortgage rate .

To find how much interest is paid on your initial monthly mortgage payment, you just need to apply the interest rate against your mortgage balance as a monthly rate. Applying the 3% mortgage rate to the mortgage balance, you will get an annual interest amount of $15,000. You then divide this by 12 to get your monthly interest amount, which would be $1,250. As your monthly payment is $2,500, the remaining amount of $1,250 will go towards your principal.

To calculate mortgage interest paid for the second month, you first need to recalculate your mortgage balance. Since you paid $1,250 towards your principal in the first month, your new mortgage balance is $498,750. The interest paid will be 3% of $498,750 divided by 12 to get a monthly rate. You will get $1,246.87, which is the interest paid in the second month. Your principal payment will be the remaining out of the $2,500 payment, which would be $1,253.13.

Notice how your interest payment is slightly lower while your principal payment is now slightly higher. You paid $3.13 less interest in the second month compared to the first month, and you paid $3.13 more towards your principal in the second month compared to the first month.

You will now repeat the same steps until your mortgage is fully paid off. A way to easily organize and calculate this is to create an amortization schedule. You can use the mortgage interest calculator above to calculate your total interest and principal payments, and also to create a downloadable amortization schedule.

Bi-Weekly vs Monthly Mortgage Payments

Bi-weekly mortgage payments means that you make mortgage payments every two weeks. Since the time between payments is reduced, the effect of lower mortgage balances and resulting lower interest can build up how to find out account number for straight talk. Bi-weekly payments also mean that you will make more mortgage payments in a year.

There are 12 months in a year, which will result in only 12 mortgage payments if you were to make monthly payments. There are 52 weeks in a year, which will result in 26 bi-weekly mortgage payments. This creates an additional 2 bi-weekly mortgage payments, or the equivalent of an extra monthly mortgage payment, every year.

Making more mortgage payments with bi-weekly mortgage payments will allow you to make more payments, resulting in your mortgage being paid off sooner. Choosing bi-weekly payments can let you pay off your mortgage a few years earlier, while also saving you in mortgage interest.

How Does Amortization Affect Mortgage Interest?

Your amortization period is the length of time that it will take for you to pay off your mortgage fully if you only make your required regularly scheduled mortgage payments. The longer you owe money, the more time there is for interest to be charged. That’s why a longer amortization period will result in a higher total interest paid compared to a shorter amortization period. On the other hand, a shorter amortization requires larger mortgage payments in order to pay off the mortgage faster. While this will save you money, you will need to be able to afford these larger payments.

In Canada, the most common amortization period is 25 years. Coincidently, it’s also the maximum amortization limit allowed for insured mortgages, such as mortgages that have CMHC insurance. However, you can always choose to have a shorter or longer amortization period. How will your amortization affect your mortgage interest?

Let’s take a look at a mortgage with a principal balance of $500,000 and a fixed mortgage rate of 2.50%. We will compare 15-year, 20-year, 25-year, and 30-year amortizations to see how much interest you will have to pay over the lifetime of your mortgage loan.

If you chose a 20-year amortization instead of 25-years, you will need to pay an extra $406 every month but you will save $37,042 in interest over 20 years. If you paid an extra $1,091 every month for a 15-year amortization, you’ll save a total of $72,815 in interest. If you want to lower your mortgage payments and choose to get a 30-year amortization instead, you’ll save $268 per month through lower payments but end up paying $38,293 more in interest.

The interest paid on 30 year mortgage calculator vs. principal ratio also gives us a look at how each option compares. With a 30-year amortization, you’ll be paying 42.2% on your mortgage balance in interest. Choosing a 15-year amortization can slash this ratio in more than half, to just 20%. Of course, the above calculations assume that you will not be making any extra payments and that your mortgage rate is fixed at 2.50%. The numbers will change depending on your actual interest rates, but the positions of each option will not.

Breakdown of Mortgage Payments

It’s important to understand your mortgage payment structure so that you can find ways to save money. Let's take a look at mortgage payments and their payment breakdowns.

Your mortgage principal balance and your mortgage interest will change during your mortgage term, but something that doesn't change is your monthly payment amount. Your selected amortization period determines your monthly payment amount which will be fixed for the duration of your term. When you first get a mortgage, most of your monthly payment will go towards interest. You haven’t had time to pay down your mortgage balance yet, and so when interest is charged, you’ll need to pay interest on a higher mortgage balance.

As time passes by and your balance decreases, there is less balance remaining for interest to be charged. This reduces the proportion american fidelity mortgage services interest charged compared to your monthly payment. The amount remaining can then go towards paying down your mortgage balance further. This is similar to compound interest but in reverse.

Effects of Amortization on Mortgage Interest
  • Mortgage Principal Balance: $500,000
  • Mortgage Rate: 2.50% fixed for the entire amortization
15 Year20 Year25 Year30 Year
Monthly Mortgage Payment$3,334$2,649$2,243$1,975
Monthly Payment Difference(Compared to 25 Year)+$1,091+$406--$268
Total Interest Cost(Until Mortgage Is Fully Paid Off)$100,110$135,883$172,925$211,218
Total Interest Cost Difference(Compared to 25 Year)-$72,815-$37,042-+$38,293
Interest vs Principal Ratio20.0%27.2%34.6%42.2%

This is one reason why making mortgage prepayments is so important if you want to save money. Banks and mortgage lenders usually allow you to make mortgage prepayments up to a certain limit every year for closed mortgages. For example, RBC lets you make prepayments up to 10% of your principal every year, while the limit with TD is 15%. You can make prepayments without prepayment penalties if you stay under their annual limits.

Mortgage prepayments are payments that go directly towards paying down your principal balance. Making prepayments can also allow you to pay off your mortgage ahead of schedule. This saves you money and makes you one step closer to becoming mortgage-free.

The calculators and content on this page are provided for general information purposes only. WOWA does not guarantee the accuracy of information shown and is not responsible for any consequences of the use of the calculator.

How a 15-year and 30-year monthly mortgage calculator helps you

Buying a home is likely one of the most exciting financial commitments of your life, so it's important to set yourself up for success. This starts with being realistic about the type of house you'll be able to afford and whether you should get a 15-year or 30-year mortgage loan.  A mortgage calculator is a helpful tool when making this decision.

What is a mortgage calculator?

A mortgage calculator helps estimate your monthly mortgage payment. With our mortgage calculator, you simply enter the home price, your down payment, the property zip code, your credit score and what's most important to you when choosing a loan. After plugging in the numbers, the calculator provides your estimated total mortgage payment, including principal, interest, taxes and insurance.

15- and a 30-year mortgage: What’s the difference?

Choosing the right mortgage term for your needs is important, and is ultimately up to your discretion. A 15-year mortgage is a home loan with a fixed interest rate and monthly payment over a 15-year timespan. A 30-year mortgage is paid over the course 30 years. Your monthly payments are much lower with a 30-year mortgage term because they’re spread out across a larger timespan, but the interest you end up paying is much higher.

When do people use a 15-year mortgage

A 15-year mortgage is desirable because, ultimately, you may end up paying less than you would with a 30-year mortgage because you’re paying interest for a shorter period. But keep in mind that the monthly payments are much higher, so you may not be able to afford a more expensive home.

In addition, 15-year mortgages usually come with lower interest rates. If you’re approaching retirement, this may make more sense for you, as well. It may be beneficial to pay your house off so when you’re done working, you no longer have to worry about mortgage payments.

When do people use a 30-year mortgage

A 30-year mortgage is desirable because the monthly payments are much lower since you have more time to pay off the loan. You also have the option to pay it off in less than 30 years. For example, you could take out a 30-year mortgage and, if you have the money, pay it off in 15 years. Some people think of this option as a low risk, high reward situation.

Conversely, if you lock yourself into a 15-year mortgage, you may risk not being able to afford the payment. Missing even one payment can have a negative impact on your credit score. Using a mortgage calculator and planning out future costs can help you avoid these mistakes.

The potential pros and cons of a 15-year mortgage

Potential pros of a 15-year mortgage:

  • May save you money in the long run
  • Could have lower interest rates
  • May be a better option when approaching retirement
  • Tends to create faster equity

Potential cons of a 15-year mortgage:

  • Often larger monthly payments
  • Potentially limit your buying options
  • Less liquidity

The potential pros and cons of a 30-year mortgage

Potential pros of a 30-year mortgage:

  • Often lower monthly payments
  • More financial flexibility
  • May be easier to qualify for
  • Increased short-term cash flow

Potential cons of a 30-year mortgage:

  • Often pay more due to interest over time
  • Typically higher interest rates
  • Tends to create slower gains in equity

How a monthly mortgage calculator can help you decide

A mortgage calculator is one of the first suggested steps in the homebuying journey. It will help you be realistic about what you can afford. This ultimately narrows down your search and makes the house hunting process easier.

The calculator will break down an estimate of what your mortgage would be on a monthly basis. Factoring in your monthly mortgage with other expenses before buying a home provides room to plan for short-term and long-term financial goals. The most common mortgage calculators are for 15-year mortgages and 30-year mortgages.

It’s important to keep building up a savings account, retirement funds and other goals while financing your home, so this should be considered when planning your mortgage payments.

Overall, do what will allow you to live your desired lifestyle while still being able to afford your mortgage payment. This is where a monthly mortgage calculator can come in handy.

Time to pick the right mortgage term for you

Now that you've seen what a 15- and 30-year loan looks like, it's time to decide which is best for your needs. We encourage you to look at your finances and make sure you have enough income to keep up with your monthly payments, with room to spare. Don’t forget about the down payment, upkeep, upgrade costs and everything else that comes with owning your own home. A monthly mortgage calculator can be extremely helpful when making a decision that will impact your finances for years to come. 


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The products, interest paid on 30 year mortgage calculator packages, promotional offers and services described in this website may not apply to customers of International Personal Bank U.S. in the Citigold® Private Client International, Citigold® International, Citi International Personal, Citi Global Executive Preferred, and Citi Global Executive Account Packages.


15-Year vs. 30-Year Mortgage Calculator

Choosing between a 15-year and 30-year mortgage depends on how large of a payment you feel comfortable making each month. While a 15-year mortgage will save you tens of thousands in interest, you’ll have to contend with a higher monthly payment — which could be out of reach for some buyers.

Information and interactive interest paid on 30 year mortgage calculator are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.

Buying a home will likely be the largest purchase you make in life. If you’re trying to decide on the loan term that makes sense for you, using a 15-year vs. 30-year mortgage calculator will help you make the smartest choice for your mortgage term. You won’t find a one-size-fits-all answer to the debate between 15-year and 30-year mortgages. Each has its own benefits and drawbacks, and you’ll have to weigh them for yourself based on your financial goals.

A mortgage calculator to help you understand your options when choosing a mortgage term for your new home, so you should take advantage of this tool and the other information available to help make a decision.

15- vs. 30-year mortgage

The difference between a 15-year mortgage and a 30-year mortgage seems pretty straightforward — it takes you twice as long to pay off your loan with a 30-year loan vs. a 15-year loan, which is half the term of the former. But it isn’t that simple — ultimately, the math behind each loan type can help you get a clear picture of everything from your monthly payment to the amount of interest you pay and how quickly you build equity in your home.

The effects of amortization

Amortization is the accounting term for paying off a debt over time with fixed monthly payments. It determines the mix of interest and principal in every monthly payment. At first, a big chunk of your fixed monthly payment will go to interest. But, over time, the principal portion will get bigger until nearly all of your payment goes to principal rather than interest.

For a 15-year mortgage, your bank will use a 15-year mortgage rates calculator to figure out your monthly payments. It divides your interest rate by 12 to get your monthly rate and then multiplies it by your remaining principal each month to calculate how much interest you owe. It also calculates how much principal you need to pay down each month to get your balance to zero in 15 years. As your balance goes down, so will your interest payments, allowing even more of your fixed monthly payment to go to the principal.

The calculations for 30-year loans work the same way. The difference is, though, that with 30-year loans, a calculator will show that you’ll be paying interest for longer before you start knocking down your principal. This means it takes longer to build equity in a 30-year mortgage.

Tip: A mortgage calculator will show you the amortization schedule for each loan you calculate so you can see how the principal and interest change over time.

15-year mortgage options

If you want the lowest interest possible, consider a 15-year fixed-rate mortgage. The average interest rate for a 15-year loan was 2.86% as of June 22, 2020. Mortgage rates are near record lows right now for all loan types, making it a great time to buy a home or refinance your current loan.

The biggest benefit of choosing a 15-year mortgage is its low interest rate. According to historical mortgage data from Freddie Mac, 15-year loans almost always come with a lower rate than their 30-year counterparts. Choosing a loan with a lower interest rate means more money in your pocket over time.

However, 15-year loans do come with higher monthly payments, which may make you think twice before choosing this option over a 30-year loan. You can see the difference when using a 15-year mortgage calculator to figure out your monthly payment and total interest over the life of the loan. Take, for example, the following scenario:

  • Home price: $200,000
  • Down payment: $20,000 (10%)
  • Mortgage principal: $180,000
  • Interest rate: 2.86%

With this example, your monthly payment would be $1,230 for principal and interest. It would take you 25 payments to get to 20% equity in your home so you can stop paying for mortgage insurance. Over the life of your loan, you’d pay $41,616.09 in interest, which is 20.8% of your home’s value.

Tip: Many banks will offer 10- interest paid on 30 year mortgage calculator 20-year terms along with the standard 15-year and 30-year mortgage options.

30-year mortgage options

The staple of American home buying has always been the 30-year conventional mortgage. This mortgage option gives you a lower monthly payment but you will have to pay significantly more in interest over the life of your loan. The interest rates for 30-year mortgages are slightly higher than 15-year loans at 3.40% on average as of June 22, 2020.

With a 30-year loan, it will take you much longer to reach major milestones along the way. For the first several years, a significant portion of your monthly payment will go to interest alone, making it more difficult to build up equity.

You’ll see the difference in a 15-year vs. 30-year mortgage when comparing the costs of the same house from the example above.

  • Home price: $200,000.
  • Down payment: $20,000 (10%).
  • Mortgage principal: $180,000.
  • Interest rate: 3.41%.

In this situation, your monthly payment would be $799 for principal and interest, but it would take you 64 months to reach 20% equity so you can get rid of private mortgage insurance — compared to only 25 months for a 15-year loan. You’ll end up paying $107,805.61 (54% of the purchase price) in total interest compared to only 20.8% of the price for a 15-year mortgage.

Pro tip: Making extra principal payments early on will help you build equity faster and dramatically lower your total interest paid.

Mortgage typeAverage ratesRequired down paymentMonthly principal + interest for $200,000 loan at the average interest rate
15-year fixed2.860%At least 3% of the purchase price$1,230
30-year fixed3.41%As low as 0% of the purchase price for some loan types$799

Should I always take a 15-year mortgage if I can afford interest paid on 30 year mortgage calculator 15-year mortgage will make the most sense for nearly everyone who can afford it. You’ll build equity faster, be mortgage-free sooner and save tens of thousands of dollars in interest while you’re paying off the loan.

You should also consider a few other opportunities that make a 30-year loan more attractive, too. First, having a lower monthly payment gives you greater financial flexibility. While you’re paying on the loan over a longer period, you’ll have more cash every month that you can save, invest or simply use to enjoy life.

You can also opt to make additional principal payments on a 30-year loan to mimic a 15-year amortization schedule, giving you the flexibility to fall back to the lower 30-year payment if you lose income or want to save for a big purchase coming up.

The final word

Choosing between a 15- and 30-year mortgage is a difficult — and extremely personal — decision. Only you can decide how comfortable you are with a larger monthly payment or with paying significantly more interest over the life of your loan. To help you decide, you can use a 15-year vs. 30-year mortgage calculator to help you determine exactly how much you can spend on a house with each loan type while still staying within your comfort zone.

Trevor Wallis

Contributing Writer

Author Information: Trevor Wallis is a freelance content writer helping marketing and personal finance companies share their wealth of knowledge with the world. You can read his rants about cash and coffee on Twitter.


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