Should You Go With a 25-Year or 30-Year Amortization?
When choosing a mortgage, one of the decisions you'll make is whether to go with a 25-year or 30-year amortization. The main difference comes down to how much you’ll pay each month vs. how much interest you’ll pay over time. There’s no right or wrong answer—just what fits your priorities and goals.
Monthly Payment vs. Total Interest
Here’s how the numbers compare on a $500,000 mortgage:
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25-year amortization:
Monthly payment: $2,663.21
Total interest paid: $304,962.92
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30-year amortization:
Monthly payment: $2,421.26
Total interest paid: $376,706.77
You’ll save about $242 per month with the 30-year option, but you’ll pay about $71,743.85 more in interest over the life of the loan.
[Click here to see which amortization fits your budget best]
30-Year Amortizations Now Available With 5% Down
Until recently, 30-year amortizations were only available if you had 20% down or more. But that changed in 2024.
Now, if you're a first-time home buyer and/or you're buying a new construction home, you may qualify for a 30-year amortization—even with as little as 5% down.
The mortgage must be insured, and the home must be for owner-occupied use.
A Small Premium Increase With 30-Year Insured Mortgages
If you're putting less than 20% down and opting for a 30-year amortization, the mortgage insurance premium increases slightly.
For example:
It's a small difference, but it does add to the total loan amount.
Helps With Qualifying Too
Choosing a 30-year amortization can also help you qualify for a higher mortgage amount. Since the monthly payments are lower, the ratios used in your approval calculations improve—which can bump up your maximum purchase price.
[Click here to find out how much more you could qualify for with a 30-year option]
Strategy: Flexibility Now, Prepay Later
If your goal is to pay less interest but still want flexibility, here’s a strategy:
Take the 30-year amortization for lower required payments, but make extra payments each month or in lump sums during the year.
This gives you breathing room when you need it, while still reducing your interest over time by paying ahead when possible.
FAQ
Is it harder to get approved for 30 years?
Not necessarily—many buyers actually qualify for more with the longer amortization.
Is the higher premium worth it?
It depends. For many buyers, the flexibility and improved cash flow are worth the slight increase in insurance cost.
Final Thoughts
Whether you choose a 25- or 30-year amortization comes down to what matters more—lower monthly payments or less interest over time. Both options are valid—it just depends on your situation and goals.
[Click here if you want to compare amortization options side by side]