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Pros and Cons of a 15-Year Mortgage

A 15-year mortgage lets you own your home faster and pay less interest. Higher monthly payments are the trade-off.

Kate Wood
Chris Jennings
Michelle Blackford
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A 15-year mortgage is the dream home loan for buyers who can afford higher monthly payments and want to pay off their mortgage in half the usual time. A 15-year timeline can save thousands or even tens of thousands of dollars in interest.
To make a 15-year fixed-rate mortgage work, you’ll need a reliable income and enough money left after your monthly payment to cover expenses, savings and emergencies.

What is a 15-year mortgage?

A 15-year mortgage will be paid off completely in 15 years if you make all the payments on schedule. These mortgages typically have a fixed rate, which means the interest rate stays the same for as long as you hold the mortgage. Your costs for property taxes and home insurance can change, though.
Fifteen-year mortgages are less common than 30-year home loans, partly because the monthly payments on 15-year loans are higher. That's the case even though rates tend to be lower for 15-year mortgages.
» MORE: Compare costs for a 15-year vs. a 30-year mortgage

What are the pros and cons of a 15-year mortgage?

A shorter mortgage will help you build equity faster, but it comes with higher monthly payments that need to fit comfortably within your budget. The right choice isn’t necessarily about speed, it’s about aligning your loan with your lifestyle, cash flow and overall financial priorities. Here’s a closer look at the pros and cons to consider.

Pros of a 15-year mortgage

Build equity faster

A 15-year fixed-rate mortgage, with its lower interest rate and higher payment amount, builds home equity faster because you pay down the principal balance quicker.

Shorter path to full homeownership

Owning a home free and clear is a goal that burns bright for many people. What matters most to them is a feeling of safety from knowing that their home is fully paid off.

Long-term savings

Lenders are exposed to fewer years of risk on a 15-year mortgage, so they charge a lower interest rate. Half as many years of payment also means you pay half as many years of interest.
Let’s compare the principal and interest — not including homeowners insurance, property tax or private mortgage insurance — for a $400,000 mortgage with 20% down:
Loan term
Interest rate
Monthly payment
Total interest paid
30-year fixed
6.30%
$1,980
$393,056
15-year fixed
5.64%
$2,638
$154,930
The 15-year loan costs $238,126 less in interest.
» MORE: Best mortgage refinance lenders

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Cons of a 15-year mortgage

Larger monthly payments

Monthly principal and interest payments for a 15-year fixed-rate mortgage run about 30% higher than on a 30-year home loan. You also have to pay property taxes, insurance and, if you put less than 20% down, mortgage insurance. This could make it hard to respond to emergencies and other needs. Even if numbers seem doable now, a mortgage is a commitment. Getting out means selling, refinancing or foreclosure.
🤓 Nerdy Tip
If you're unsure that you'll always be able to make bigger payments, choose a mortgage with a longer term, then pay extra toward the principal each month. That way, you're still paying down the mortgage more quickly, but you aren't in hot water if there's a month where you can only afford the minimum payment.

Opportunity cost

Using more money for monthly mortgage payments means it’s not available for other investments such as home improvements or capturing an employer’s matching contribution to a retirement account.
» MORE: Should you pay off your mortgage early?

Tighter range of home affordability

Since 15-year mortgages come with higher monthly payments, you may qualify for less. That might mean buying a smaller house or forgoing your dream neighborhood. Stretching the loan over 30 years and keeping your payments low could give you more choices.

Alternatives to a 15-year mortgage

30-year mortgage with extra payments

Choosing a 30-year mortgage doesn’t mean you can’t pay it off faster. One of the best ways to reduce your loan term without committing to a shorter mortgage is by making extra payments toward the principal each month. If your budget allows, you could even pay it down at the pace of a 15-year loan. But if your finances change along the way, you’ll still have the flexibility of a 30-year mortgage and its lower required monthly payments.

20-year mortgage

An extra five years can make a big difference. A 20-year mortgage offers a middle-ground option for borrowers who want to pay off their home faster than a 30-year loan while still keeping monthly payments more manageable than a 15-year mortgage. Many lenders offer 20-year terms, making it a flexible choice for balancing affordability while still getting some of the long-term interest savings.

Adjustable-rate mortgage (ARM)

An adjustable rate mortgage can be a good option for buyers who don’t plan to stay in their home long term. ARMs typically start with a lower introductory interest rate than a fixed-rate mortgage, which can mean lower monthly payments initially. For example, with a 5/6 ARM, the interest rate stays fixed for the first five years and then adjusts every six months afterward based on market conditions.
Because rates can increase over time, ARMs are often best suited for homeowners who expect to move, refinance or pay off the loan before the adjustment period begins.

Is a 15-year mortgage right for you?

A 15-year fixed-rate mortgage is a great tool for borrowers who can afford the higher payments while still saving and investing for retirement. Paying off a mortgage gives many people a feeling of independence, safety and accomplishment.
But if your income is uncertain or variable, avoid the 15-year mortgage. Ask yourself: What would happen if the payments became too much? Do you have a realistic plan to cope, or would you stretch your finances too far?
NerdWallet writer Isabella Angelos contributed to this story.
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