How this works
The math compares two amortization schedules — your current loan continued to its natural end vs. the new 15-year — and adds in closing costs. The savings come from two sources:
- Less time accruing interest. 15 years instead of 26+ means fewer total months of interest charges. This is usually the bigger lever.
- Lower rate. 15-year rates are typically 0.5-0.75% below 30-year rates. Smaller lever but compounds.
The affordability check uses two industry-standard ratios:
- Front-end ratio: mortgage payment ÷ gross monthly income. Lender max ~28%, comfort threshold under 25%.
- Back-end ratio (DTI): (mortgage + all other debt) ÷ gross monthly income. Lender max ~36-43%, comfort threshold under 36%.
The single most important number this calculator surfaces: can you afford the higher payment without raiding your emergency fund or pausing retirement contributions? If yes, the refi is usually a no-brainer. If no, paying extra on the 30-year captures most of the benefit without locking you in.
The honest verdict logic
- ✅ Refinance: meaningful interest savings, new payment under 28% front-end and 36% DTI back-end, closing-cost break-even under 36 months.
- ⚠️ Pay extra on the 30 instead: the new payment is affordable but tight, OR the rate spread is too narrow to justify closing costs. Capture the savings via extra payments without locking in the higher minimum.
- ❌ Don't refinance: new payment exceeds 28% of gross, OR DTI over 43%, OR break-even is so far out that life uncertainty kills the bet.
FAQ
How much can I really save going from 30 to 15?
Typically a third to half of the original loan amount in interest. On a $400,000 loan that's $150,000-$250,000 in lifetime savings. The exact figure depends on your rates and how many years into the 30 you are.
What's the catch?
Your monthly payment jumps significantly — often 25-50% higher. The cash going toward the loan can't go anywhere else. Make sure you can comfortably absorb the higher payment AND maintain emergency savings AND retirement contributions.
Should I just pay extra on my 30-year instead?
Almost as good. You'd capture most of the interest savings while keeping the flexibility of the lower required payment. The downsides: you don't lock in the lower 15-year rate, and you have to actually be disciplined enough to make the extra payments. The 15-year locks the discipline in for you.
What if 15-year rates aren't much lower than 30-year?
If 15-year rates are within 0.25% of 30-year rates, the refi math gets weaker. Most of the savings come from less time accruing interest, but the rate spread still matters. Below 0.25% spread, paying extra on the 30 may be a smarter move.
What's a safe payment-to-income ratio?
Lender max is usually 28% of gross income for housing alone, or 36-43% including other debt. For comfort, target under 25% front-end. The 15-year jump can push you past that line — calculator flags this.
Are there closing costs to worry about?
Yes — typically 2-5% of the loan amount. Break-even on closing costs is closing costs ÷ monthly payment savings. For 30-to-15 refis, "monthly savings" is negative (you're paying MORE per month), so break-even is calculated via total interest savings instead.