15-Year vs. 30-Year Conventional Mortgage: Which One Is Right for Arizona Buyers?

A 30-year conventional mortgage has lower monthly payments but costs significantly more in total interest over the life of the loan.

A 15-year mortgage builds equity faster and typically carries a lower interest rate, but the higher monthly payment requires more income to qualify. Paying discount points to lower your rate makes sense if you plan to stay in the home long enough to recoup the upfront cost, typically three to seven years.

Most Arizona buyers I talk to have already thought about this question before they call me. They've done some math on a calculator, seen two different monthly payment numbers, and now they're stuck. The lower payment feels safer. The shorter term feels smarter. And then someone mentions points and the whole thing gets complicated.

Here's what I tell them: this isn't a values question. It's a math question. And the math is pretty straightforward once you put real numbers on it.

This article covers:

• The actual dollar difference between a 15-year and 30-year loan on a $350,000 mortgage at current Arizona rates
• Which term makes more sense depending on your situation
• What discount points are, what they cost, and how to calculate whether buying them makes financial sense
• How your rate lock fits into this decision

15-Year vs. 30-Year: The Real Numbers

Let's use a $350,000 loan, which is a realistic number for many Arizona buyers in the Phoenix metro and surrounding areas right now. I'll use current 2026 conventional rates: approximately 6.6% for a 30-year and 5.9% for a 15-year. That's roughly a 0.7 percentage point spread, which is near the low end of the historical range, according to Freddie Mac's Primary Mortgage Market Survey.

Here's what those numbers actually look like side by side:

30-Year at 6.6%

• Monthly payment (principal and interest): $2,235
• Total paid over the life of the loan: $804,600
• Total interest paid: $454,600
• Loan balance after 10 years: approximately $295,000

15-Year at 5.9%

• Monthly payment (principal and interest): $2,934
• Total paid over the life of the loan: $528,200
• Total interest paid: $178,200
• Loan balance after 10 years: approximately $164,000

The 15-year saves you roughly $276,400 in total interest. But it costs you $699 more per month to get there.

What That $699 Actually Means

That $699 difference is the whole conversation. It's not just a number, it's a qualification question. Lenders calculate your debt-to-income ratio using the payment on the loan you're applying for. A higher payment means you need more qualifying income to get approved for the 15-year. If you're close to the edge of your approval, the 30-year is often the only realistic option, regardless of how appealing the interest savings look on paper.

The other thing I tell people: the 30-year gives you flexibility the 15-year doesn't. You can always make extra principal payments on a 30-year loan and pay it off faster. You can't call the bank and ask for a lower payment when things get tight on a 15-year.

Key insight: The 15-year wins mathematically. The 30-year wins practically for buyers who need cash flow flexibility or whose income doesn't support the higher payment.

Which Term Is Better for a First-Time Buyer in Arizona?

For most first-time buyers I work with in the Phoenix area, Scottsdale, Tempe, and across the Valley, the 30-year is the right starting point. Here's why.

First-time buyers are often stretching to qualify in the first place. Arizona home prices have stayed elevated, and the gap between what buyers can afford on paper and what they're comfortable paying each month is real. Adding $699 to a monthly payment to save interest over 15 years sounds great until you realize it also means you can't qualify for the loan at all, or that you're leaving yourself no financial cushion for property taxes, HOA fees, maintenance, or anything else that comes with owning a home.

Second, many first-time buyers don't stay in their first home for 30 years anyway. The average homeowner in Arizona sells or refinances within 7 to 10 years. If that's your situation, the total interest savings of the 15-year shrinks considerably, because you're not holding it long enough to capture the full benefit.

The 15-year makes more sense when:

• Your income comfortably supports the higher payment with room to spare
• You're buying a home you plan to stay in long-term, not a starter property
• You're later in your career and want the mortgage paid off before retirement
• You've already gotten fully pre-approved and your lender confirmed you qualify at the higher payment

The 30-year makes more sense when:

• You're a first-time buyer stretching to qualify
• Your income is solid but not so far above the threshold that $699 extra per month is trivial
• You value flexibility and want the option to invest or save the difference
• You're in a starter home and expect to move or upgrade within 10 years

The 30-year doesn't mean you'll pay interest for 30 years. It means your required payment is lower, and you can always pay more when you have it.

What Are Mortgage Discount Points?

Discount points are prepaid interest. You pay money upfront at closing in exchange for a lower interest rate on your loan. That's it. There's no mystery to it.

One point costs 1% of your loan amount. On a $350,000 mortgage, one point costs $3,500. In return, your lender reduces your interest rate, typically by about 0.20 to 0.25 percentage points per point, though the exact reduction depends on your lender, your loan type, and current market conditions. It's not a fixed formula, and two lenders can quote you two very different rate reductions for the same point cost.

This is also called a mortgage rate buydown, and it's one of the most misunderstood parts of the loan process. Buyers see a quoted rate that's lower than what they expected and assume they're getting a deal. Sometimes they are. But sometimes that lower rate comes with two points baked into the quote, and nobody explained that upfront.

What Discount Points Are Not

Points are not the same as origination fees or lender fees. Those are costs you pay to process the loan. Points are optional. You don't have to buy them. And unlike most other closing costs, paying points is a choice with a direct financial trade-off: more money now, less interest later.

According to the Consumer Financial Protection Bureau, paying one discount point generally reduces a 30-year loan rate by about 0.25%, though this varies significantly by lender. Always ask your lender to show you the exact rate reduction and monthly savings for any points they're quoting.

Before you decide on points, you need to know three things:

• The exact cost of the points in dollars
• The exact monthly payment reduction you'll get
• How long you plan to keep the loan

How to Calculate Whether Buying Points Is Worth It

The calculation is simple. Divide the cost of the points by your monthly payment savings. That gives you the break-even point in months.

Break-even formula: Points cost ÷ Monthly payment savings = Months to break even

Here's a real example on a $350,000 loan. Say buying one point costs $3,500 and drops your rate by 0.25%, which lowers your monthly payment by about $57.

$3,500 ÷ $57 = 61 months, or just over 5 years.

If you stay in the home and keep the loan past 61 months, the points paid off. If you sell, refinance, or pay off the loan before then, you lost money on the deal.

The Part Most People Miss

The simple break-even calculation is a useful starting point, but it leaves out two important factors that pull in opposite directions.

First, there's opportunity cost. That $3,500 you spent on a point could have gone into savings or investments. If you're earning even a modest return on that cash, your true break-even stretches out a bit further than 61 months.

Second, a lower rate means more of each monthly payment goes toward principal. After five years, the borrower who bought the point has built slightly more equity than the one who didn't. That faster equity build pulls the true break-even in the other direction.

Net of both factors, most analysts land the real break-even somewhere close to the simple calculation, which is why the formula holds up as a first screen. But the point is: don't make this decision based on a low advertised rate alone. Make it based on your actual numbers and your actual timeline.

When Buying Points Makes Sense in Arizona

Arizona buyers who are planning to stay in their home long-term, particularly those buying in established neighborhoods where they see themselves for 10 or more years, are the ones for whom points often make sense. If you're buying a starter home in the Phoenix suburbs and expect to upgrade in five years, points are almost certainly not worth it.

Points are worth considering when:

• Your break-even is under 5 years and you plan to stay well beyond that
• You have the cash to pay for them without depleting your reserves or down payment
• You're not expecting to refinance in the next few years (rates dropping would reset your break-even entirely)
• The seller is offering to cover closing costs, and paying points is part of that negotiation

Skip the points when:

• You're tight on cash at closing
• You're buying a starter home or plan to move within 5 to 7 years
• You think you'll refinance when rates drop
• The rate reduction offered per point is less than 0.20% (the math rarely works)

How the Rate Lock Fits Into This Decision

Here's where these two decisions connect in a way most buyers don't think about until it's too late.

When you lock your rate, you're locking in the rate and the points structure at the same time. If you pay points to buy down your rate and then rates drop significantly before closing, you've locked into a bought-down rate that's now higher than what you could have gotten for free. Your break-even math changes completely.

On the flip side, if rates rise after you lock, the points you paid look even smarter, because you locked in a lower rate before the market moved against you.

The rate lock decision and the points decision are connected. I cover rate locks in detail in the next article in this series, but the short version is this: don't commit to paying points until you're ready to lock. The rate sheet changes daily. What looks like a good points deal today may look different in two weeks.

A few things to keep in mind about rate locks and points:

• Rate lock periods typically run 30, 45, or 60 days. Longer locks sometimes cost more.
• Points are priced on the day you lock. You don't shop for points separately from your rate.
• If your lock expires and you need to extend it, the pricing may change, which affects the points calculation.
• Once you lock, the points cost is set. There's no adjusting it unless you start over with a new application.

If you're comparing loan estimates from multiple lenders, make sure you're comparing the same points structure. A lender quoting 6.5% with two points is not competing fairly against a lender quoting 6.75% with zero points. The Consumer Financial Protection Bureau's Loan Estimate guide explains how to read the points line on your official Loan Estimate so you can make an apples-to-apples comparison.

FAQ

Should I choose a 15-year or 30-year conventional mortgage?

It depends on your income, your monthly budget, and how long you plan to stay in the home. A 15-year mortgage saves significantly more in total interest, roughly $276,400 on a $350,000 loan at current rates, but the monthly payment is about $699 higher. If your income supports the higher payment comfortably and you're buying a long-term home, the 15-year is the stronger financial choice. If you're a first-time buyer in Arizona stretching to qualify, or if you need payment flexibility, start with the 30-year. You can always pay extra principal when your situation allows.

Should I pay points to lower my conventional mortgage rate?

Only if your break-even timeline works. Divide the cost of the points by your monthly payment savings to find out how many months it takes to recoup the upfront cost. If that number is less than how long you plan to keep the loan, points make sense. If you're planning to sell, move, or refinance before you hit break-even, skip the points. Also make sure you have enough cash left over after paying points to cover your down payment, closing costs, and reserves.

How much do conventional mortgage discount points cost?

One discount point costs 1% of your loan amount. On a $350,000 mortgage, one point costs $3,500. On a $400,000 mortgage, one point costs $4,000. Most lenders offer fractional points as well, such as 0.5 or 0.75 points. The rate reduction you get per point varies by lender and market conditions, but typically falls in the range of 0.20 to 0.25 percentage points per point purchased.

How do I know if buying points makes financial sense?

Use the break-even formula: points cost divided by monthly payment savings equals months to break even. If one point costs $3,500 and saves you $57 per month, you break even in about 61 months, or just over five years. If you plan to stay in the home and keep the loan well beyond that, points are worth considering. If there's any chance you'll sell or refinance before then, the math doesn't work in your favor. Also factor in whether you'll have enough cash reserves after paying points, because depleting your savings at closing creates its own risk.

Ready to run the numbers on your specific situation? I'm licensed in Arizona and can walk you through both the term decision and the points question before you lock. Start at joonago.com or call or text 414.617.3042.

Joe Huljak | NMLS #250873 | Joonago Mortgage Services | Company NMLS #249858 | AZ License MB-0945285