15-Year vs 30-Year Mortgage

The choice between a 15-year and 30-year mortgage is one of the most impactful financial decisions in the home buying process. The 15-year saves an enormous amount in total interest. The 30-year offers a lower required payment and more flexibility. Neither is universally better -- the right answer depends on your income, job security, and financial goals.

Side-by-Side Comparison: $300,000 Loan

Factor	15-Year (6.25%)	30-Year (6.75%)
Monthly payment	$2,572	$1,946
Monthly difference		$626 less
Total interest paid	$162,960	$400,560
Interest savings	$237,600 less
Equity after 5 years	~$70,900	~$18,400
Paid off	Year 15	Year 30

Use the mortgage calculator to run your specific loan amount and current rates.

Why the 15-Year Wins on Total Cost

Two things work in the 15-year mortgage's favor simultaneously. First, the rate is typically 0.5%-0.75% lower. Second, the loan is repaid in half the time, so interest accrues for far fewer months. Combined, these factors mean the 15-year mortgage can cost less than half the total interest of a 30-year on the same amount.

The amortization schedule on a 15-year also front-loads principal repayment much more aggressively -- you build equity significantly faster, which matters if you want to access it through a HELOC or plan to sell and move up.

Why the 30-Year Is Still the Right Choice for Many Borrowers

The 30-year mortgage dominates for a reason -- it works for most situations:

Lower required payment $600+/month less on the same loan gives you breathing room for emergencies, retirement contributions, and other goals
Flexibility you can always make extra principal payments voluntarily, but you cannot lower the required payment on a 15-year if money gets tight
Opportunity cost if you can invest the $626/month difference and earn more than your mortgage rate, the 30-year can mathematically win
Qualifying the lower payment makes it easier to meet DTI requirements for approval

The Middle Path: 30-Year with Extra Payments

Many homeowners choose the 30-year mortgage for its lower required payment, then make consistent extra principal payments to shorten the effective term. This gives the best of both worlds -- the flexibility to pay the lower amount in tight months, with the interest savings of a shorter payoff when finances allow.

Use our early payoff calculator to see exactly how many years you cut off and how much interest you save with different extra payment amounts.

Who Should Choose Each

Choose 15-Year if you...

Have stable, high income with room to absorb the higher payment
Are closer to retirement and want the home paid off sooner
Want to minimize total interest as the primary goal
Have no high-interest debt competing for that extra cash

Choose 30-Year if you...

Need the lower payment to comfortably qualify or budget
Have variable income or want financial flexibility
Are early in your career with income expected to grow
Plan to invest the difference in retirement accounts

Frequently Asked Questions

Is a 15-year mortgage always better than a 30-year?

Not always. A 15-year mortgage saves significantly on total interest, but the higher monthly payment may strain your budget. If the higher payment prevents you from saving for retirement or emergencies, a 30-year with voluntary extra payments may serve you better.

How much lower is the rate on a 15-year mortgage?

Typically 0.5%-0.75% lower than a 30-year mortgage. On a $300,000 loan this rate difference alone saves thousands, on top of the interest savings from the shorter term.

Can I pay off a 30-year mortgage in 15 years?

Yes -- by making extra principal payments consistently. The benefit is flexibility: if your finances tighten, you can revert to the standard payment. With a 15-year mortgage, the higher payment is locked in.

Which term is better if I plan to sell in 5-7 years?

For short holding periods, the 30-year often makes more sense. The rate difference and payment savings matter less over 5-7 years, and the lower mandatory payment gives you more flexibility.

Does a 15-year mortgage build equity faster?

Yes -- significantly. The lower rate and faster amortization schedule mean a much larger portion of each payment goes to principal from day one, building equity much faster than a 30-year loan.