- Interest saved
- The 30-year loan’s total interest minus the 20-year loan’s total interest, for the same loan amount. The saving comes from two sources: the balance is paid off ten years sooner, and shorter terms usually carry a lower rate. It assumes both loans are kept to maturity with no extra payments.
- Principal and interest (P&I)
- The part of a mortgage payment that repays the loan and covers interest, which is what both monthly payments show here. The 20-year payment is higher because the same principal is repaid over fewer months. Property taxes, homeowners insurance and any mortgage insurance would be added on top.
- Loan amount
- The amount borrowed: the home price minus your down payment. The calculator uses the same loan amount for both terms so the comparison isolates the effect of term and rate. A larger loan scales the payments and the interest difference up proportionally.
- Interest rate
- The annual percentage the lender charges on the outstanding balance, before fees. Lenders typically price 20-year loans a little below 30-year loans. The calculator divides each rate by 12 and applies it monthly, so even a small spread between the two rates changes the interest saved. Use actual quotes for both terms.
- Loan term
- The number of years over which the mortgage is scheduled to be fully repaid, here 20 or 30. A longer term spreads the principal over more payments, lowering each one, but leaves the balance outstanding longer, so total interest rises. A shorter term does the opposite: higher payments, less interest overall.
- Amortization
- Paying off a loan through regular, equal payments that cover both interest and principal. Early payments are mostly interest; later ones are mostly principal. On a 20-year schedule a larger share of each payment goes to principal from the start, so equity builds noticeably faster than on a 30-year loan.
- Total interest
- The sum of all interest paid over the full term: the monthly payment times the number of payments, minus the loan amount. It assumes every scheduled payment is made and nothing extra is paid. On a 30-year mortgage it can approach or exceed the amount borrowed, depending on the rate.
- Payment difference
- How much more the 20-year loan costs each month than the 30-year loan. It is the practical cost of the interest saving, and the figure to weigh against your budget and other goals. Some borrowers take the 30-year loan and prepay voluntarily, keeping the lower required payment as a fallback.
