15-Year vs 30-Year Mortgage: Which Should You Choose?
A worked comparison of monthly payment and total interest — plus the situations where each term actually wins.
A 15-year mortgage carries a higher monthly payment but a lower rate and far less total interest. On a $400,000 loan at illustrative rates of 7% (30-year) and 6.375% (15-year), the 15-year payment runs about $795/month more — but saves roughly $336,000 in interest over the life of the loan.
Choose 15-year if your budget comfortably absorbs the higher payment; choose 30-year if you want flexibility or have other financial priorities competing for that cash.
The 15-vs-30 decision is really a trade-off between two things: how fast you want to be debt-free and how much monthly flexibility you want along the way. Both are mathematically defensible choices — the "right" one depends entirely on your budget and priorities, not on which term is objectively smarter.
Worked Example: $400,000 Loan
Using illustrative rates of 7% for the 30-year and 6.375% for the 15-year (a typical rate spread — check current rates for your actual numbers):
| 30-year | 15-year | |
|---|---|---|
| Monthly payment (P&I) | ~$2,661 | ~$3,456 |
| Total paid over full term | ~$958,000 | ~$622,000 |
| Total interest paid | ~$558,000 | ~$222,000 |
The 15-year loan costs about $795 more per month but saves roughly $336,000 in interest — because it combines a lower rate with half as many years for interest to accrue. Run your own loan amount and current rate through our mortgage payment calculator or amortization calculator to see the exact split for your situation.
Pros and Cons of Each Term
15-year mortgage
- Lower interest rate than a 30-year loan
- Dramatically less total interest paid
- Builds home equity much faster
- Mortgage-free in half the time
30-year mortgage
- Lower, more manageable monthly payment
- Frees up cash for retirement savings, investing, or other debt
- More flexibility if income is variable
- Can still pay extra toward principal voluntarily
A 15-year term is best for
- Buyers whose budget comfortably absorbs the higher required payment
- Anyone prioritizing being mortgage-free before retirement
- Buyers with no higher-interest debt competing for the same cash
- Refinancers with significant existing equity who want to minimize remaining interest
The Hybrid Approach
You don't have to choose exclusively. Taking a 30-year mortgage and voluntarily making extra principal payments sized to match a 15-year amortization schedule captures most of the interest savings while keeping the lower required payment as a safety net — if a lean month hits, you can skip the extra payment without risking default, something a true 15-year loan's higher required payment doesn't allow. Use our loan payoff calculator to see exactly how much faster extra principal payments retire a 30-year loan.
Worth knowing: If you're also weighing whether to refinance into a shorter term on an existing mortgage, the same math applies — see our refinancing break-even guide before you decide.
Frequently Asked Questions
Is a 15-year or 30-year mortgage better?
Neither is universally better — a 15-year mortgage minimizes total interest paid and builds equity faster, while a 30-year mortgage offers a lower, more flexible monthly payment. The right choice depends on your monthly budget, other financial priorities, and how much payment flexibility you value.
How much more expensive is a 15-year mortgage per month?
On a $400,000 loan at illustrative rates of 7% (30-year) and 6.375% (15-year), the 15-year payment runs roughly $795/month higher — about $3,456 versus $2,661 — while cutting total interest paid by roughly $336,000 over the life of the loan.
Do 15-year mortgages have lower interest rates?
Yes, typically. Lenders generally price 15-year mortgages at a lower rate than 30-year mortgages on the same loan, often by roughly half a percentage point or more, because the shorter term carries less long-run risk for the lender.
Can I get a 15-year payoff with a 30-year mortgage?
Yes — taking a 30-year mortgage and voluntarily making extra principal payments sized to a 15-year amortization schedule gets you most of the interest savings while keeping the lower required payment as a safety net in months when cash is tight.
Does a 15-year mortgage build equity faster?
Yes, substantially. Because more of each payment goes to principal rather than interest on a 15-year loan, you build home equity much faster than on a 30-year loan, even beyond the effect of the shorter overall term.
Who should choose a 30-year mortgage instead?
Buyers who want maximum monthly flexibility, are prioritizing other goals like retirement savings or paying off higher-interest debt, or are stretching to afford a home in a competitive market often do better with a 30-year term, especially if they plan to make extra payments when cash flow allows.
