Purchase Tips · June 14, 2025
Choosing Your Mortgage Term: 15, 20, and 30-Year Loans Compared
Your loan term dramatically affects your monthly payment and total interest paid. Here is how to choose the right term for your income, goals, and timeline.
One of the most impactful decisions in your mortgage is the loan term. Here is how common options compare on a $300,000 loan.
30-Year Fixed
Rate approximately 7.0%. Monthly P&I: $1,996. Total interest: $418,527.
Pros: Lowest required payment, easiest to qualify, maximum cash flow flexibility. Best for: Buyers who need to preserve cash flow or want flexibility to make voluntary extra payments.
20-Year Fixed
Rate approximately 6.75%. Monthly P&I: $2,281. Total interest: $247,000.
A meaningful middle ground — $171,000 less interest than a 30-year for only $285 more per month.
15-Year Fixed
Rate approximately 6.25%. Monthly P&I: $2,572. Total interest: $162,963.
Saves over $255,000 vs. the 30-year. Rate is typically 0.50-0.75% lower. Best for: Strong earners focused on payoff speed and minimizing total interest.
The Smart Play: 30-Year With Extra Payments
Take the 30-year for payment flexibility, then make voluntary extra principal payments. An extra $200/month cuts the term to approximately 23 years and saves approximately $90,000.
HMS models all term options for every borrower. Call 309-222-8286.