15 Year Fixed vs 3 Year Calculator

Introduction

Fixed-rate mortgages offer stability in monthly payments, but the length of the term affects how much you pay in interest and how quickly you build equity. A 15-year fixed mortgage typically has a higher interest rate than a 3-year fixed mortgage, but you'll pay off the loan faster and pay less in total interest.

The choice between a 15-year and 3-year fixed rate depends on your financial goals, risk tolerance, and ability to save for a down payment. This guide will help you understand the key differences and make an informed decision.

How to Use This Calculator

To use the calculator, enter the loan amount, current interest rates for both terms, and any down payment you plan to make. The calculator will show you the monthly payments, total interest paid, and the difference between the two options.

The results will help you understand which option is more affordable in the long run and which one offers better interest savings.

Key Differences Between 15-Year and 3-Year Fixed Rates

Interest Rates

15-year fixed rates are typically higher than 3-year fixed rates because lenders charge a premium for the shorter repayment period. This higher rate compensates for the increased risk of interest rate changes over a shorter period.

Monthly Payments

With a 3-year fixed rate, your monthly payments will be higher because you're repaying the loan faster. A 15-year fixed rate will have lower monthly payments, which can be more manageable for your budget.

Total Interest Paid

A 15-year fixed rate will result in lower total interest payments over the life of the loan compared to a 3-year fixed rate. This is because you're paying off the loan over a longer period, allowing interest to accumulate more slowly.

Equity Building

A 3-year fixed rate will help you build equity more quickly, as you'll be paying down the principal faster. A 15-year fixed rate will take longer to build equity, but you'll have more time to save for other financial goals.

Comparison Table

Examples

Example 1: $200,000 Loan

For a $200,000 loan with a 3-year fixed rate of 4.5% and a 15-year fixed rate of 3.5%, the calculator would show:

• 3-year fixed: Monthly payment of $7,142, total interest of $32,000
• 15-year fixed: Monthly payment of $1,600, total interest of $24,000

In this example, the 15-year fixed rate offers lower monthly payments and less total interest, but the 3-year fixed rate builds equity faster.

Example 2: $300,000 Loan

For a $300,000 loan with a 3-year fixed rate of 4.75% and a 15-year fixed rate of 3.75%, the calculator would show:

• 3-year fixed: Monthly payment of $10,710, total interest of $50,000
• 15-year fixed: Monthly payment of $2,400, total interest of $36,000

Here, the 15-year fixed rate offers significant savings in monthly payments and total interest, making it a more affordable option.