15- vs 30-Year Mortgage
Choosing your loan term is one of the biggest decisions in a mortgage. It comes down to a trade-off: a lower monthly payment now, or far less interest over time. This guide breaks down the difference with real numbers. To compare both on your own figures, use the free mortgage calculator and switch the term between 30 and 15.
In short: a 30-year loan gives you a lower, more flexible payment. A 15-year loan gives you a much lower total interest cost and faster equity, in exchange for a higher monthly payment.
The core trade-off
Both loans pay off the same amount borrowed. The difference is how quickly. A shorter term means bigger monthly payments, but because you're borrowing the money for half as long, you pay dramatically less interest. A longer term spreads smaller payments over more years, which is easier on your monthly budget but far more expensive in total.
An example: $300,000 at 6.5%
Here's the same $300,000 loan at a 6.5% rate, compared across both terms:
| 30-year | 15-year | |
|---|---|---|
| Monthly payment (P&I) | ~$1,896 | ~$2,613 |
| Total interest paid | ~$383,000 | ~$170,000 |
| Total of payments | ~$683,000 | ~$470,000 |
| Paid off in | 30 years | 15 years |
The 15-year payment is about $717 more per month, but it saves roughly $212,000 in interest and you own the home outright in half the time. In reality the gap is often even wider, because lenders usually offer a lower rate on 15-year loans (see the note below).
Why 15-year loans often have lower rates
A shorter term is less risky for the lender, so 15-year mortgages typically come with a rate about 0.5%–0.75% lower than the equivalent 30-year loan. That lower rate compounds the interest savings, making the 15-year option even more efficient than the same-rate comparison above suggests. When you run your own numbers, try entering a slightly lower rate for the 15-year term to see a realistic picture.
Full cost when the 15-year rate prices lower
The table above holds the rate constant so that the term is the only variable. Lenders price the two products separately, so a more realistic comparison pairs a 30-year rate with a slightly lower 15-year rate. The pairs below are illustrative, not quoted rates: each 15-year figure sits 0.5% under its 30-year partner, the low end of the usual spread. All six loans are the same $300,000.
| Illustrative pair | 30-yr P&I | 15-yr P&I | Monthly gap | 30-yr interest | 15-yr interest | Interest saved |
|---|---|---|---|---|---|---|
| 6.0% / 5.5% | $1,798.65 | $2,451.25 | $652.60 | $347,515 | $141,225 | $206,290 |
| 6.5% / 6.0% | $1,896.20 | $2,531.57 | $635.37 | $382,633 | $155,683 | $226,951 |
| 7.0% / 6.5% | $1,995.91 | $2,613.32 | $617.41 | $418,527 | $170,398 | $248,129 |
Two patterns hold across all three pairs. The monthly gap narrows as rates rise, because a rate discount is worth more when money costs more, while the interest saved widens, from about $206,000 in the cheapest pair to about $248,000 in the dearest. The higher the rate, the more the shorter term buys on total cost and the less it costs in cash flow.
Equity after five years
Total interest is the headline number, but equity is what you can sell into, borrow against, or use to cancel PMI. A 15-year loan front-loads principal, so the two terms separate quickly. These are the balances on the same $300,000 loan at 6.5% after exactly 60 scheduled payments:
| After 5 years | 30-year | 15-year |
|---|---|---|
| Remaining balance | $280,833 | $230,151 |
| Principal retired | $19,167 | $69,849 |
| Total paid in | $113,772 | $156,799 |
Five years in, the 15-year borrower has retired $50,682 more principal after paying $43,027 more in total. Roughly $50,700 of extra equity cost about $43,000 of extra cash, and the difference is interest that was never charged: the money is redirected from the lender to your own balance rather than saved.
When a 30-year makes sense
- You want the lowest required payment for breathing room in your budget.
- You'd rather invest the monthly difference, or keep cash flexible for other goals.
- You want to qualify for a larger home; the lower payment stretches further under lending limits.
- You can still pay extra when you want to cut interest without being locked into the higher payment.
When a 15-year makes sense
- You can comfortably afford the higher payment and want to minimize total interest.
- You want to build equity quickly or own the home free and clear sooner (e.g. before retirement).
- You value the lower interest rate and the discipline of a fixed, faster payoff.
The middle path: a 30-year with extra payments
Not sure? Many buyers take the 30-year loan for its lower required payment, then voluntarily pay extra toward principal, effectively paying it off like a 15-year loan in good months, but keeping the option to fall back to the smaller payment when needed. The calculator's extra-payment field models exactly this: it shows the new payoff date and the interest saved. The main thing you give up is the lower 15-year interest rate. It's a popular way to get most of the savings with more flexibility.
How much extra it takes is easy to pin down. On the $300,000 loan at 6.5%, the required 30-year payment is $1,896.20 and the loan runs all 360 months at a cost of $382,633 in interest. Adding a fixed amount to principal every month changes that:
| Extra per month | Paid off in | Total interest | Interest saved |
|---|---|---|---|
| $200 | 277 months (23 yr 1 mo) | $279,185 | $103,449 |
| $400 | 228 months (19 yr 0 mo) | $222,801 | $159,832 |
| $717 | 181 months (15 yr 1 mo) | $170,413 | $212,221 |
The last row is the whole point. $717 is exactly the payment gap between the two terms at the same rate, and paying it as extra principal on the 30-year loan lands within one month of the 15-year payoff and within about $15 of its interest total. Amortization does not care whether a payment is required or voluntary; the contract does. The 30-year borrower can drop back to $1,896.20 in a hard month, while the 15-year borrower owes $2,613.32 either way, and buys the lower rate by giving up that option.
Reading the trade-off for your own situation
The two lists above describe circumstances, not verdicts. In practice the choice tends to sort on three questions that arithmetic alone cannot answer:
- How steady is the income behind the payment? A required payment is a fixed claim on every month, including the bad ones. Variable or commission-based income makes the lower required payment worth more as insurance than it costs in interest.
- What else competes for the difference? The $617 to $717 a month that separates the terms could go to retirement contributions, an emergency fund, or higher-rate debt. A 15-year loan commits it to a guaranteed return equal to the mortgage rate.
- When does the loan need to be gone? A target date, such as retirement, turns a preference into a calculation. Pick the year you want the balance at zero and the term largely chooses itself.
One direction is reversible and the other is not: a 30-year borrower can pay like a 15-year borrower any month they choose, while moving the other way means refinancing.
Try both: open the mortgage calculator, enter your price and down payment, and toggle the term between 30 and 15. Watch the monthly payment and total interest change instantly.
Frequently asked questions
Is a 15-year mortgage better than a 30-year?
Neither is universally better. A 15-year saves huge interest and builds equity fast but has a higher payment; a 30-year is cheaper monthly and more flexible but costs far more overall. It's a trade-off between cash flow and total cost.
How much interest do you save with a 15-year mortgage?
On a $300,000 loan at 6.5%, about $212,000: roughly $170,000 in interest versus $383,000. With the lower rate 15-year loans usually get, the saving is often larger.
Can I just pay extra on a 30-year instead?
Yes. Extra principal payments shorten the term and cut interest, with more flexibility. You just won't get the lower 15-year rate.
More mortgage guides
- What's in a mortgage payment? (PITI, PMI & HOA)
- How much is PMI, and how do I remove it?
- How much house can I afford?
- Mortgage calculator FAQ
This guide is general information, not financial advice. Rates and figures vary. Confirm all numbers with your lender.
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