15-Year vs 30-Year Mortgage: The Real Math

A 15-year mortgage charges a lower interest rate and eliminates debt in half the time, but the monthly payment is much higher. A 30-year mortgage keeps payments low and flexible, but you pay far more interest over time. There is no universally right answer — only the math applied to your budget, goals, and risk tolerance.

Run both scenarios in our Mortgage Calculator as you read. Seeing your own numbers makes the tradeoff concrete.

Assume a $400,000 loan with a 6.0% rate on the 15-year and 6.5% on the 30-year (shorter terms usually price about half a point lower). The 15-year payment is about $3,376 per month, while the 30-year payment is about $2,528 per month — a difference of $848.

But total interest tells the other half of the story: the 15-year costs about $208,000 in interest, while the 30-year costs about $510,000. The 30-year borrower pays roughly $300,000 more for the privilege of lower payments. That is the real price of flexibility.

After 5 years, the 15-year borrower owes about $303,000 (nearly $100,000 of equity from paydown alone), while the 30-year borrower still owes about $373,000. Faster equity means a bigger cushion if home values dip, easier refinancing, and a shorter path to owning your home free and clear.

This matters most if you might move or refinance within a decade. With a 30-year loan, the early years barely dent the balance, so selling after 5–7 years can leave you with little to show for your payments.

The 30-year is not just for stretched budgets. Its lower required payment gives you options: invest the $848 monthly difference, keep a larger emergency fund, or make extra principal payments when cash flow allows. If you invest the difference at a 7% average return, you could come out ahead of the 15-year's interest savings.

The 30-year also protects you in bad times. If income drops, the lower required payment is easier to keep paying. You can always pay a 30-year like a 15-year by adding extra principal — but you cannot pay a 15-year like a 30-year when money is tight.

Choose the 15-year if the higher payment still leaves room for retirement savings, an emergency fund, and your lifestyle — and you value being debt-free sooner. Choose the 30-year if the 15-year payment would strain your budget, if you want investment flexibility, or if you expect income growth that lets you prepay later.

A middle path exists too: take the 30-year and make one extra payment per year, or round your payment up. Even modest prepayments cut years off the loan. And remember PITI — taxes and insurance apply either way, so review what PITI includes before finalizing your budget.