A 30-year loan or a 15-year loan?  

A 30-year loan will result in the lowest monthly payment, but with a very heavy price tag. Over the life of the loan, most of your monthly payment is applied to the interest, so very little of your payment goes toward paying off the debt. Even after ten years, only a small amount of the loan balance has been paid off, and you will have built almost no equity into the home. The only real advantage is that the monthly payment is low.

A 15-year loan, however, results in a marginally higher (typically only $100-150 higher) monthly payment, but over the life of the loan far more of the monthly payment goes toward payment of the debt. From the very beginning, a large amount of the monthly payment goes toward the principal balance, and that is just like putting money in the bank. You will get it all back when you sell the house. In a way, it is like a savings account in your house.

The LOAN CALCULATOR will give you an approximation of the monthly payment you can expect on a fixed rate 30-year vs. 15-year loan, with the resulting interest savings.