15-Year vs 30-Year Mortgage: Which Is Right for You?

A 15-year mortgage has higher monthly payments but saves you $150,000-$300,000 in interest compared to a 30-year loan. On a $350,000 mortgage, a 15-year at 5.75% costs $2,912/month versus $2,212/month for a 30-year at 6.5%—a $700 difference. The 15-year pays off faster and typically offers rates 0.5-0.75% lower than 30-year mortgages.

Payment Comparison: 15-Year vs 30-Year

Side-by-Side Monthly Payments

$350,000 loan at current rates:

Metric	15-Year	30-Year	Difference
Interest rate	5.75%	6.50%	-0.75%
Monthly P&I	$2,912	$2,212	+$700
Total payments	$524,160	$796,320	-$272,160
Total interest	$174,160	$446,320	-$272,160

The 15-year payment is 32% higher, but you pay 61% less in total interest.

Payment Examples at Various Loan Amounts

Loan Amount	15-Year Payment	30-Year Payment	Monthly Difference
$200,000	$1,664	$1,264	+$400
$300,000	$2,496	$1,896	+$600
$400,000	$3,328	$2,528	+$800
$500,000	$4,160	$3,160	+$1,000

Interest Savings Breakdown

Where the Savings Come From

Lower interest rate: 15-year loans typically offer 0.5-0.75% lower rates

Faster principal paydown: More of each payment goes to principal

Shorter timeframe: Less time for interest to accumulate

Total Interest Paid Comparison

$300,000 loan:

Term	Rate	Monthly	Total Interest
30 years	6.50%	$1,896	$382,633
20 years	6.25%	$2,200	$228,000
15 years	5.75%	$2,496	$149,280

Choosing 15 years over 30 years saves $233,353 in interest.

Interest Paid Over Time

$350,000 loan—how much goes to interest vs principal:

30-Year Loan:

• Year 1: $22,600 interest, $4,000 principal
• Year 10: $19,200 interest, $7,400 principal
• Year 20: $12,800 interest, $13,800 principal
• Year 30: $1,400 interest, $25,200 principal

15-Year Loan:

• Year 1: $19,800 interest, $15,100 principal
• Year 5: $15,200 interest, $19,700 principal
• Year 10: $8,400 interest, $26,500 principal
• Year 15: $1,100 interest, $33,800 principal

The 15-year builds equity dramatically faster.

Pros and Cons of 15-Year Mortgages

Advantages

Massive interest savings: Save $150,000-$300,000 over the life of the loan

Lower interest rate: Typically 0.5-0.75% less than 30-year

Build equity faster: Own your home outright in 15 years

Forced savings: Higher payment builds wealth automatically

Retire debt-free: Pay off before retirement if you buy in your 40s-50s

Disadvantages

Higher monthly payment: $500-$1,000+ more per month

Less financial flexibility: More money locked in your home

Qualification challenges: Harder to qualify due to higher payment

Opportunity cost: Money could potentially earn more if invested

Cash flow constraints: Less cushion for emergencies or other goals

Pros and Cons of 30-Year Mortgages

Advantages

Lower monthly payment: More affordable day-to-day

Easier qualification: Lower DTI, easier to get approved

Financial flexibility: Extra cash for investing, emergencies, other goals

Inflation hedge: Fixed payment becomes relatively cheaper over time

Can pay extra anyway: Make extra payments when able, revert to minimum when needed

Disadvantages

Much more total interest: Pay $150,000-$300,000 more over loan life

Higher interest rate: Typically 0.5-0.75% more than 15-year

Slower equity building: Takes longer to own meaningful portion of home

Debt for 30 years: Psychological and financial burden for decades

Retirement risk: May still have mortgage payment in retirement

Who Should Choose a 15-Year Mortgage?

Ideal Candidates

High earners: If the higher payment fits comfortably in your budget

Near retirement: Want to be mortgage-free before stopping work

Disciplined spenders: Less temptation to spend the “saved” money

Low other debt: No high-interest debt that should be prioritized

Stable income: Secure job with predictable earnings

Financial Benchmarks

Consider a 15-year if:

• Payment is under 25% of gross income
• You have 6+ months emergency fund
• No high-interest debt
• Maxing out retirement contributions
• Comfortable budget cushion remains

Who Should Choose a 30-Year Mortgage?

Ideal Candidates

First-time buyers: Maximize buying power, build wealth over time

Variable income: Need lower required payment for tight months

Investment-focused: Want to invest the difference in market

Other financial goals: Saving for education, business, other priorities

Uncertain future: May move before 15-year term ends

The “30-Year with Extra Payments” Strategy

Take a 30-year but pay like a 15-year when possible:

• Flexibility to drop to minimum payment if needed
• No penalty for paying extra
• Can accelerate payoff when cash flow allows
• Best of both worlds

Caveat: Requires discipline. Many people don’t actually make extra payments.

The Investment Argument

The Math

Scenario: $350,000 loan, invest the payment difference

30-year payment: $2,212 15-year payment: $2,912 Monthly difference: $700

If you invest $700/month at 8% average return:

• After 15 years: $244,000
• After 30 years: $1,050,000

Meanwhile, the 30-year loan costs $272,000 more in interest.

Net after 30 years (investing difference): +$778,000

Why This Argument Has Flaws

Assumes you actually invest: Most people spend the difference

Investment returns aren’t guaranteed: Market can underperform

Tax implications differ: Mortgage interest may be deductible, investment gains taxed

Risk tolerance: Market volatility vs guaranteed savings

Psychological value: Being debt-free has real value

Hybrid Approach: 20-Year Mortgage

The Middle Ground

Metric	15-Year	20-Year	30-Year
Rate	5.75%	6.00%	6.50%
Payment ($350K)	$2,912	$2,508	$2,212
Total interest	$174,160	$251,920	$446,320

The 20-year offers:

• $400 lower payment than 15-year
• $194,400 less interest than 30-year
• Balanced approach to speed and affordability

When 20-Year Makes Sense

• 15-year is too tight on budget
• 30-year feels too long
• Want faster payoff with more flexibility

Making the Decision

Questions to Ask Yourself

1. Can you comfortably afford the 15-year payment?

• Leave room for emergencies, retirement savings, life
• “Comfortable” means not stressed about making payment

2. How long will you stay in the home?

• Selling in 5-10 years? 30-year flexibility may matter more
• Staying 15+ years? 15-year savings are substantial

3. What’s your risk tolerance?

• Guaranteed savings (15-year) vs potential investment gains (30-year)
• How would you feel in a market downturn?

4. Do you have discipline to invest the difference?

• Be honest—most people don’t
• If you’d spend it, the 15-year forces savings

5. What are your other financial goals?

• High-interest debt? Pay that first
• Retirement underfunded? Consider 30-year and max 401(k)
• Other major expenses coming? Keep flexibility

The Right Choice by Situation

Situation	Recommended
High income, stable job, no debt	15-year
First-time buyer, tight budget	30-year
10+ years from retirement	15-year
Variable income	30-year
Investment-focused, disciplined	30-year + invest difference
Want simplicity, guaranteed savings	15-year
Near loan limits for income	30-year
Strong emergency fund, maxed retirement	15-year

Refinancing Considerations

Switching From 30-Year to 15-Year

If you have a 30-year mortgage, you can refinance to 15-year when:

• Your income has increased
• You’ve paid down other debt
• You want to accelerate payoff
• Rates have dropped significantly

Example:

• Original: 30-year at 7%
• After 5 years: Refinance remaining balance to 15-year at 5.75%
• Result: Paid off in 20 total years, significant interest savings

Already Locked Into 30-Year?

You can approximate a 15-year by making extra payments:

• Pay extra principal each month
• Make biweekly payments
• Apply windfalls to principal

Frequently Asked Questions

Is a 15-year mortgage worth it?

Yes, if you can comfortably afford the higher payment. You’ll save $150,000-$300,000 in interest and build equity faster. It’s not worth it if the payment strains your budget or prevents other financial priorities.

How much more is a 15-year mortgage payment?

Typically 30-50% higher than a 30-year payment. On a $300,000 loan, expect roughly $600-$700 more per month.

Can I switch from a 30-year to 15-year mortgage?

Yes, through refinancing. You’ll need to qualify for the new loan and pay closing costs (2-3% of loan). Calculate whether the interest savings exceed refinance costs.

Is it better to get a 30-year and pay extra?

It can be, if you have the discipline. The 30-year gives flexibility—you can pay extra when able but drop to minimum if needed. The 15-year forces higher payments, which some prefer.

What’s the interest rate difference between 15 and 30 year?

Typically 0.5-0.75% lower for 15-year. If 30-year rates are 6.5%, expect 15-year rates around 5.75-6.0%.

At what age should you get a 15-year mortgage?

Consider a 15-year if you want to be mortgage-free by retirement. If you’re 50 and want to retire at 65, a 15-year ensures you’re debt-free. Younger buyers might prefer the flexibility of a 30-year.