Is a 15-year or 30-year mortgage better?

Neither is universally better. A 15-year mortgage saves tens of thousands in interest and gets you debt-free faster, but the monthly payment is roughly 25% to 35% higher. A 30-year mortgage keeps payments lower and frees up cash for investing or other goals, but you pay significantly more interest over the life of the loan. The right choice depends on your cash flow, investment discipline, risk tolerance, and how long you plan to stay in the home.

How much interest do you save with a 15-year mortgage?

On a $300,000 loan at typical market spreads (5.5% on the 15-year vs 6.5% on the 30-year), the 15-year saves about $130,000 in interest over the life of the loan. The savings come from two sources: a lower interest rate (15-year loans are usually priced 0.25 to 0.75 percentage points lower) and the shorter amortization period, which means interest accrues for half as long.

Why is the 15-year mortgage rate lower than the 30-year rate?

Lenders price shorter-term loans lower because there is less risk. Over 15 years, inflation, rate changes, and borrower default risk are more predictable than over 30 years. The 15-year also amortizes faster, so the lender's exposure to the principal drops more quickly. This lower risk translates to a lower interest rate, typically 0.25% to 0.75% below the 30-year fixed rate.

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

Yes. You can make extra principal payments on a 30-year mortgage to mimic a 15-year payoff schedule. This gives you the flexibility to fall back to the lower 30-year payment in tight months. However, you'll pay a higher interest rate on the 30-year loan, so the total interest paid will be slightly higher than a true 15-year mortgage, even with the same payoff timeline. Use our mortgage calculator to model extra payments.

Does the 30-year mortgage let me invest the difference and come out ahead?

Historically, long-term stock market returns (around 7% to 10% annually) have exceeded mortgage rates, so investing the monthly payment difference in a diversified portfolio has often produced more wealth than paying the mortgage faster. This is called the opportunity cost argument. However, market returns are not guaranteed while the mortgage interest savings are, and many borrowers spend rather than invest the difference. The 30-year only wins on this measure if you actually invest the gap consistently.

What if I plan to sell or move within 10 years — which term is better?

For short holding periods, the 30-year is often the safer choice. You get the lower monthly payment and flexibility, and the interest savings of the 15-year are partially offset by closing costs and the rate at which equity builds early in the loan. However, the 15-year builds equity much faster — by year 5 you have paid down about 20% to 25% of the principal versus only 5% to 8% on a 30-year — which can matter if you need the equity for the next down payment. Run both scenarios through the calculator with your expected sale year.

Are there tax implications to choosing 15 vs 30 years?

Mortgage interest is tax-deductible if you itemize, up to the IRS limits on acquisition debt. The 30-year loan generates more interest, which means a larger deduction — but that deduction is worth less than the interest itself (you save only your marginal tax rate on each dollar of interest, not the full dollar). Tax considerations rarely change the 15-vs-30 decision; the lower total cost of the 15-year almost always wins on a net-of-tax basis. Consult a tax professional for your specific situation.

What credit score and income do I need to qualify for a 15-year mortgage?

Lenders typically require a credit score of 620 or higher for a 15-year conventional loan, the same as for a 30-year. The bigger hurdle is debt-to-income (DTI) ratio: the 15-year's higher payment means you need a higher income or lower debts to stay under the typical 43% DTI cap. A 15-year loan also requires you to afford the higher payment through job loss, illness, or other income disruption — make sure your emergency fund can cover at least 6 months of the higher payment.

15 vs 30 Year Mortgage Comparison

A 15-year vs 30-year mortgage comparison tool is a free online tool that shows how loan term length affects your monthly payment and total interest. It compares monthly payment, total interest, and total cost side by side to help you choose the right term. Free, no sign-up required.

Loan Details

Loan Amount?Enter your loan amount.

15-Year Rate?Enter your 15-year rate.

30-Year Rate?Enter your 30-year rate.

End of inputs

15-Year vs 30-Year Mortgage

Metric	15-Year Fixed Lower total cost, higher monthly payment (5.50% rate)	30-Year Fixed Lower monthly payment, higher total cost (6.50% rate)
Monthly Payment	$2,451.25	$1,896.20
Total Interest	$141,225.11	$382,636.71
Total Cost	$441,225.11	$682,636.71
Payoff Time	15 years	30 years

The 15-year costs $555/month more but saves $241,412 in interest. Choose 15-year to minimize total cost; choose 30-year for cash-flow flexibility.

Key Insights

The 15-year loan saves $241,411.60 in interest — more than 50% of the loan amount. This massive saving is the primary argument for the shorter term: you pay for the lower payment with $241,411.60 of additional interest on the 30-year loan.

Your 15-year rate of 5.50% is 1.00% lower than the 30-year's 6.50% — an unusually wide spread. The 15-year benefits from both the shorter term AND a large rate discount, making the interest savings especially compelling. Verify both quotes come with comparable fees and that the 15-year rate isn't a teaser requiring points.

The 15-year builds equity roughly twice as fast as the 30-year — by year 5, you would have paid down about 20%–25% of the principal versus only 5%–8% on the 30-year. This matters if you plan to sell or refinance within 10 years, or if you want a guaranteed return equal to your mortgage rate. Faster equity buildup also means easier access to home equity loans and removal of PMI sooner.

Choosing the 30-year frees up $555.05/month versus the 15-year. This cash can fund retirement, emergency savings, or college — and historically, long-term market returns (7%–10%) have beaten mortgage rates, so investing the difference can build more wealth than paying the loan faster. You can always make extra principal payments on a 30-year to mimic a 15-year, but you cannot lower a 15-year payment in a tight month.

The 15-year payment of $2,451.25 is $555.05 more per month than the 30-year's $1,896.20 — a manageable gap for many budgets. The trade-off is between higher monthly cost and long-term interest savings.

Guide

How to Use This Calculator

1Enter the loan amount you are borrowing (the principal, after your down payment). For a $400,000 home with 20% down, this would be $320,000.
2Set the 15-year interest rate using the slider. Check with multiple lenders for actual quotes; 15-year rates are typically 0.25% to 0.75% lower than 30-year rates.
3Set the 30-year interest rate using the slider. Use a realistic quote from your lender or a recent market average.
4Review the side-by-side comparison: monthly payment, total interest, total cost, and payoff time for each scenario.
5Read the AI Insight panel for personalized analysis of the payment burden, interest savings, cash-flow flexibility, equity buildup, and rate trade-offs.
6Adjust the loan amount and rates to see how the comparison changes. The chart updates instantly to show the relative magnitude of monthly payment and total interest for each scenario.
7Use the FAQ, formula, and key terms sections below to deepen your understanding before making a decision. When ready, compare actual Loan Estimates from at least three lenders.

Formula

How It's Calculated

Both scenarios use the standard amortizing-loan monthly payment formula:

M = P × [r(1+r)^n] / [(1+r)^n − 1]

Where:
- M = monthly payment (principal + interest)
- P = loan amount (principal)
- r = monthly interest rate (annual rate ÷ 12)
- n = total number of payments (years × 12)

For a 15-year loan at 5.5% on $300,000:
- P = 300,000
- r = 0.055 / 12 = 0.004583
- n = 180
- M = $2,451.34
- Total paid = $2,451.34 × 180 = $441,241
- Total interest = $441,241 − $300,000 = $141,241

For a 30-year loan at 6.5% on $300,000:
- P = 300,000
- r = 0.065 / 12 = 0.005417
- n = 360
- M = $1,896.20
- Total paid = $1,896.20 × 360 = $682,632
- Total interest = $682,632 − $300,000 = $382,632

Interest saved by choosing the 15-year: $382,632 − $141,241 = $241,391
Monthly payment difference: $2,451.34 − $1,896.20 = $555.14

The savings come from two sources: (1) the shorter amortization period, which means interest accrues for half as long, and (2) the lower 15-year rate, which reduces the per-month interest charge on the remaining balance.

Glossary

Key Terms

FAQ

Frequently Asked Questions

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