Programme
15-Year Fixed
Half the term and far less interest, at a payment you cannot turn down later.
A 15-year fixed loan does the same arithmetic as a 30-year one over 180 months instead of 360. Two things change dramatically: the total interest, which falls by well over half, and the required monthly payment, which does not halve — it rises to roughly 1.4 to 1.6 times the 30-year payment depending on the rate. The rate itself is usually lower, because the lender's money is at risk for less time. Whether that is a good trade is not a maths question; it is a question about how certain your income is.
- 180 payments instead of 360
- Priced below the 30-year term
- Reaches 80% loan-to-value far sooner
- Much lower FHA annual MIP rate
Floor four
What it gives you
The interest saving is very large
Interest accrues on the outstanding balance, and a 15-year schedule drives that balance down roughly twice as fast. Combined with a lower rate, the total interest paid is typically less than half what the same loan costs over thirty years.
The rate is lower
The lender's capital is committed for half as long and the loan carries less duration risk, and shorter fixed terms are priced accordingly. You get the shorter schedule and a better rate on it.
Mortgage insurance ends much sooner, or never starts
On a conventional loan the balance reaches 80% of the original value years earlier, so PMI comes off years earlier. And on an FHA loan with a term of 15 years or less the annual premium rate itself is far lower — 0.15% at 90% loan-to-value or below, against 0.50% or more on a 30-year term.
You own the house outright much sooner
Fifteen years is a realistic horizon for a household that wants no mortgage before school fees, before a career change, or before retirement. That is a different kind of security from a low payment.
Floor three
What this programme costs you
Every programme buys you something by charging you something else. This is the half a brochure leaves out, and it is the half that decides whether the programme is right for you.
- Trade-off 01
The higher payment is contractual, and that is the whole risk
A 30-year loan overpaid on a 15-year schedule and a 15-year loan look identical in a good year. They are completely different in a bad one. On the 30-year you stop overpaying; on the 15-year you must find the payment or default. The rate saving is the price the lender pays you for giving up that option, and if your income is variable, self-employed or commission-based, the option is usually worth more than the saving.
- Trade-off 02
It shrinks the house you can buy
Underwriting uses the required payment in the debt-to-income ratio, and the 15-year payment is much larger. The same income therefore supports a smaller loan. Households regularly discover that choosing a 15-year term has quietly moved them out of the neighbourhood they were looking at.
- Trade-off 03
It concentrates your money in one illiquid asset
Every extra dollar of principal is a dollar not in an emergency fund, a retirement account or a business. Home equity cannot be spent without borrowing against it or selling, and the moment you are most likely to need money is also the moment a lender is least likely to lend it to you.
Floor two
The published rules, and where they come from
These are rules, not prices. This site publishes no rates, so what follows is the part of the programme that is written down somewhere a third party can check.
| Rule | What it says | Source |
|---|---|---|
| Term and structure | 180 monthly payments at a rate fixed for the whole term. | Standard level-payment amortisation; Fannie Mae Selling Guide B2-1.4-01 |
| Payment relative to a 30-year loan | Roughly 1.4 to 1.6 times the 30-year principal-and-interest payment on the same balance, the ratio rising as the rate falls. It is not double, because the interest saved offsets part of the faster principal repayment. | Level-payment amortisation — see this site's payment calculator |
| Conventional PMI | Still required above 80% loan-to-value, and still cancellable at 80% of the original value on request and 78% automatically — but the schedule reaches those points several years earlier. | Homeowners Protection Act of 1998, 12 U.S.C. 4902 |
| FHA annual MIP on a short term | For a term of 15 years or less and a base loan amount at or below the tier threshold, the annual MIP rate is 0.15% at 90% loan-to-value or below and 0.40% above it — far less than the 0.50% to 0.55% charged on a 30-year term. | HUD Mortgagee Letter 2023-05 |
| FHA MIP duration is unchanged | The 11-year and life-of-loan durations are set by the loan-to-value at origination, not by the term. A 15-year FHA loan above 90% LTV still carries the premium for its full term. | HUD Mortgagee Letter 2013-04 |
| Prepayment | As with the 30-year term, ordinary 15-year loans carry no prepayment penalty; Regulation Z permits one only on a fixed-rate Qualified Mortgage that is not higher-priced. | 12 CFR 1026.43(g) |
Floor one
Who it fits
The usual guidelines. Every one of them is a starting point that an underwriter reads against the whole file, so treat a line you miss as a conversation rather than a closed door.
- The same credit, income and asset standards as the 30-year version of the same programme
- A debt-to-income ratio that accommodates the larger required payment
- Available on conventional, FHA, VA and jumbo loans
- PMI still applies on a conventional loan above 80% loan-to-value — it simply ends sooner
- FHA loans with a term of 15 years or less use a separate, lower annual MIP rate table
- The property may be a principal residence, a second home or an investment property
Ground floor
How it goes, top to bottom
Price both terms before you choose one
Run the 15-year payment and the 30-year payment side by side, then run the 30-year overpaid to a 15-year schedule. Three numbers, one decision.
Stress-test the payment against a bad year
Assume one income stops for six months. If the 15-year payment does not survive that test and the 30-year one does, the 30-year is the correct answer regardless of the interest saving.
Pre-approval on the term you have chosen
The ratio is calculated on the required payment, so the term changes the price you qualify for. Get the approval on the term you intend to take.
Appraisal and underwriting
Identical to the 30-year process. The shorter term does not change the property requirements or the documentation.
Closing
Read the Closing Disclosure against the Loan Estimate, and confirm the term and the payment on the note are what you agreed.
Three ways to pay off a mortgage in fifteen years, or not
| Feature | 15-year fixed | 30-year fixed | 30-year, overpaid to 15 years |
|---|---|---|---|
| Required payment | The high one | The low one | The low one |
| What you actually pay | The high one | The low one | The high one, by choice |
| Rate | Priced below the 30-year | Priced above the 15-year | The 30-year rate |
| Total interest | The least of the three | The most of the three | Between the two — a 15-year schedule at a 30-year rate |
| If income stops for six months | The payment is still due in full | Nothing to change | Stop overpaying and revert to the small payment |
| Price you qualify for | Lower | Higher | Higher |
| Who it suits | Stable salaried income and a settled house | Anyone who values the option | Variable or self-employed income with the intent to pay it down |
This table scrolls sideways on a narrow screen.
Questions this raises
Is the 15-year payment double the 30-year payment?
No, and this is the most useful thing to know before you look at one. Because you pay far less interest over a shorter schedule, the payment rises by roughly 40% to 60% rather than 100% — the exact multiple depends on the rate, and it is larger when rates are lower. It is still a big increase, but it is a smaller increase than halving the term suggests.
Is a 30-year loan paid off in fifteen years the same thing?
Financially it is close but not identical: you keep the 30-year rate, which is higher, so you pay more interest than a true 15-year loan would have cost. What you buy for that difference is the right to stop overpaying in any month, without asking anyone. For a household with variable income, that option is usually worth more than the rate difference. The extra-payment calculator prices both.
Does the shorter term reduce mortgage insurance?
On a conventional loan it does not change the rate, but the balance falls faster so the insurance ends years sooner. On an FHA loan it does change the rate, and substantially: a term of 15 years or less uses a separate table in HUD Mortgagee Letter 2023-05, with rates as low as 0.15% a year. The duration rule is unaffected — that is still set by the loan-to-value at origination.
Why does a 15-year loan qualify me for less house?
Underwriting measures the required monthly payment against your income. A 15-year term produces a much larger required payment, so the same income supports a smaller loan. If the goal is the biggest defensible purchase, the 30-year term does that; if the goal is to be debt-free by a particular year, the 15-year term does that. They are different objectives and they do not have the same answer.
Put your own numbers through it
What does paying extra buy me? The extra payments page prints the rule it followed beside the answer, and the address bar carries your inputs so the link you send is the answer you saw.
Or read every programme side by side.