15-Year vs. 30-Year Mortgage: Which Should You Choose?
A 15-year mortgage has a higher payment but a lower rate and far less interest. A 30-year mortgage has a lower, more flexible payment. On a $320,000 loan the 15-year can save around $250,000 in interest. Here’s how to decide.
By Bogdan · Updated
The two most common mortgage lengths are 15 years and 30 years. The choice comes down to one trade-off: lower monthly payments or lower total cost.
Explain it like I’m 5
Imagine you owe a friend 100 cookies, and every week they charge a crumb for each cookie you still owe.
- Pay back fast (15 years): you hand back more cookies each week. It’s harder, but you owe fewer cookies for less time, so you pay far fewer crumbs.
- Pay back slowly (30 years): each week is easy, but you keep owing cookies for twice as long — and the crumbs really add up.
Compare both loan lengths with your own numbers in the mortgage calculator.
Worked example: $320,000 loan
| 30-year at 6.5% | 15-year at 5.75% | |
|---|---|---|
| Monthly payment (principal & interest) | $2,022.62 | $2,657.31 |
| Total interest | ~$408,100 | ~$158,300 |
| Still owed after 5 years | ~$299,600 | ~$242,100 |
| Debt-free after | 30 years | 15 years |
The 15-year costs about $635 more a month but saves roughly $250,000 in interest and builds equity much faster. Even at the same 6.5% rate, the 15-year would save about $226,000.
Why a 30-year can still make sense
- Lower required payment, so you’re safer if income drops.
- Flexibility: you can pay extra when you want — see how to pay off your mortgage early — and stop when you need to.
- Room for other goals: retirement saving, an emergency fund, kids.
- Qualifying: the lower payment helps your debt-to-income ratio — see the house affordability calculator.
The “invest the difference” argument
Some people take the 30-year and invest the ~$635 a month instead. At a 7% average return, that grows to about $201,000 after 15 years. Whether that beats the 15-year depends on actual market returns, taxes and — most of all — whether you really invest the difference every month. The mortgage saving is guaranteed; investment returns aren’t.
How to choose
Choose a 15-year if:
- The payment is comfortably under about 28% of your gross income.
- You’re already saving for retirement and have an emergency fund.
- You want to be mortgage-free by a certain age.
Choose a 30-year if:
- The 15-year payment would stretch your budget.
- Your income is irregular.
- You want flexibility and are disciplined enough to pay extra when you can.
A 20-year loan is a middle ground worth pricing, too.
Frequently asked questions
Is a 15-year or 30-year mortgage better?
A 15-year mortgage is cheaper overall — lower rate, much less interest, and you own your home sooner. A 30-year mortgage is more affordable each month and more flexible. If the 15-year payment fits comfortably while you still save for retirement and emergencies, it usually wins on cost; if not, a 30-year is the safer choice.
How much more is a 15-year mortgage payment?
Often 30% to 40% more. For a $320,000 loan, a 30-year at 6.5% is about $2,023 a month; a 15-year at 5.75% is about $2,657 — roughly $635 more.
How much interest does a 15-year mortgage save?
A lot. In the example above, total interest is about $408,000 on the 30-year and about $158,000 on the 15-year — a saving of roughly $250,000.
Can I pay a 30-year mortgage off in 15 years?
Yes, by paying extra each month — most loans have no prepayment penalty. You’d pay a bit more interest than a true 15-year loan because 30-year rates are usually higher, but you keep the option to drop back to the lower payment if money gets tight.
Why are 15-year mortgage rates lower?
The lender gets its money back sooner, so it takes less risk from rising rates and inflation. 15-year rates are commonly around half a percentage point to a full point below 30-year rates.
This article is for general education and is not financial, investment or tax advice. Rates, rules and limits change; check current terms with your bank or the IRS. See our disclaimer.