15 vs. 30-Year Mortgage: Which Is Better?
By the Calculator.hair team · Updated · 6 min read
Short answer
A 15-year mortgage costs more each month but far less overall. On a $320,000 loan, a 15-year at 5.75% costs $2,657 a month and $158,316 in total interest, while a 30-year at 6.5% costs $2,023 a month and $408,142 in interest. The 15-year saves about $250,000 but needs $635 more every month, so it suits buyers with stable income and savings to spare.
Key takeaways
- On $320,000, the 15-year loan (5.75%) costs $635 more a month than the 30-year (6.5%) but saves $249,826 in interest.
- 15-year loans usually carry lower rates, which accounts for part of the savings; the shorter payoff accounts for the rest.
- After 10 years the 15-year borrower owes $138,281; the 30-year borrower still owes $271,284.
- Paying the 15-year amount on a 30-year loan pays it off in about 16 years and keeps the option to pay less.
- Pick the 30-year when cash flow, emergency savings or retirement contributions would suffer from the higher payment.
What is the difference between a 15-year and a 30-year mortgage?
The difference is how long you take to repay the loan, which sets both your monthly payment and how much interest you pay. A 15-year mortgage is repaid in 180 monthly payments; a 30-year mortgage in 360. Spreading the same loan over twice as many payments lowers each one, but interest keeps accruing on the balance for twice as long.
Lenders also tend to price 15-year loans with lower interest rates, because the money is at risk for a shorter time. Freddie Mac's weekly Primary Mortgage Market Survey tracks average rates for both terms, and the 15-year average is typically below the 30-year. For the examples here we assume 6.5% for 30 years and 5.75% for 15 years; check current quotes before you decide.
How do the payments and total interest compare?
Here is a $320,000 loan (a $400,000 home with 20% down) run through our mortgage calculator. Figures are principal and interest only; property tax, insurance and any HOA dues are the same under either term and are left out.
| 30-year at 6.5% | 15-year at 5.75% | 15-year at 6.5% | |
|---|---|---|---|
| Monthly payment | $2,022.62 | $2,657.31 | $2,787.54 |
| Number of payments | 360 | 180 | 180 |
| Total of payments | $728,142 | $478,316 | $501,758 |
| Total interest | $408,142 | $158,316 | $181,758 |
| Balance after 5 years | $299,555 | $242,082 | $245,495 |
| Balance after 10 years | $271,284 | $138,281 | $142,468 |
How much does a 15-year mortgage save?
In this example the 15-year loan saves $249,826 in interest: $408,142 on the 30-year minus $158,316 on the 15-year. The cost is $634.69 more every month for 15 years.
The third column shows where the savings come from. Even at the same 6.5% rate, the shorter term alone cuts interest to $181,758, saving $226,384. The lower 15-year rate saves another $23,442. So most of the benefit comes from paying the loan off faster, and the rate discount adds to it.
You also build equity much faster. Equity is the share of the home you own outright: its value minus what you owe. After five years the 15-year borrower has paid the balance down by $77,918, versus $20,445 for the 30-year borrower. That matters if you sell or refinance early, or if prices fall.
Is a 15-year mortgage worth it?
A 15-year mortgage is worth it if you can make the higher payment without cutting into emergency savings, retirement contributions or other high-priority goals. It is a guaranteed way to save on interest, and you are debt-free 15 years sooner.
It is usually not worth it if the higher payment would stretch you. A bigger required payment also raises your housing ratio, so it shrinks the price you qualify for. On a $100,000 salary with no other debts, 20% down, 1.5% property tax and 0.5% insurance, the 28% limit supports a $347,056 home with a 30-year loan at 6.5% but only $280,788 with a 15-year loan at 5.75%. See how much house can I afford for the qualifying rules.
- Choose the 15-year if: your income is stable, you have three to six months of expenses saved, you already contribute enough to get any employer retirement match, and you want the loan gone before a goal such as retirement.
- Choose the 30-year if: the extra payment would leave little slack each month, your income varies, you are still building an emergency fund, or you have higher-interest debt to pay off first.
Can you pay off a 30-year mortgage like a 15-year?
Yes. If your loan has no prepayment penalty, you can take a 30-year mortgage and pay extra toward principal each month. Most mortgages made since 2014 have no prepayment penalty, but check your loan documents.
In our example, adding $634.69 a month to the 30-year loan, so you pay $2,657.31 just like the 15-year borrower, pays the loan off in 196 months (about 16 years and 4 months) with total interest of $199,645. That is $41,329 more interest than the true 15-year loan, the price of the higher rate, but you keep the right to drop back to $2,022.62 in a tight month.
Even smaller amounts help. An extra $200 a month on the same 30-year loan pays it off 79 months early and saves $105,429 in interest. The amortization calculator shows how any extra payment changes the schedule.
Should I refinance from a 30-year to a 15-year mortgage?
Refinancing into a 15-year loan makes sense when you can get a meaningfully lower rate and afford the higher payment. Suppose you took a $320,000, 30-year loan at 7.25% three years ago. Today you owe $309,995 with 27 years left, and your payment is $2,182.96.
Our refinance calculator shows what happens with $4,000 in closing costs and no points. A new 15-year loan at 5.75% raises the payment by $391.26 to $2,574.23 but saves $239,919 in total interest and costs over the life of the loan. A new 30-year loan at 6.5% instead lowers the payment by $223.59 and breaks even on the closing costs in 18 months, yet over its full term it costs about $2,096 more than keeping the old loan, because you restart a 30-year clock.
If you want a lower payment from a refinance and plan to pay extra anyway, compare both options in the calculator. To see how each payment is built, read how to calculate a mortgage payment.
What about a 20-year mortgage?
A 20-year mortgage sits in between. At an assumed 6.125%, a $320,000 loan costs $2,315.72 a month and $235,772 in total interest. That is $293 a month more than the 30-year and $172,371 less interest, while costing $342 a month less than the 15-year. Not every lender offers it, but it is worth asking about if a 15-year payment is just out of reach.
Calculators in this guide
Frequently asked questions
Why are 15-year mortgage rates lower?
The lender's money is outstanding for half as long, so there is less risk from rising rates and inflation. That lower risk is usually passed on as a lower rate.
How much more is a 15-year mortgage payment than a 30-year?
Typically 30% to 40% more. On $320,000, the 15-year at 5.75% is $2,657 versus $2,023 for the 30-year at 6.5%, which is 31% more.
Is it better to get a 30-year mortgage and invest the difference?
It can be if you actually invest the difference and earn more than the mortgage rate after taxes, but that return is not guaranteed. Paying down the mortgage earns a sure return equal to its rate.
Can I switch from a 30-year to a 15-year mortgage later?
Only by refinancing, which means new closing costs. Paying extra principal on your 30-year loan achieves a similar payoff date without a new loan.
Do 15-year mortgages have PMI?
Yes, if you put down less than 20% on a conventional loan. Because the balance falls faster, PMI usually drops off sooner than on a 30-year loan.
This guide is for education and is not financial, tax or legal advice. Confirm figures with a qualified professional or your lender.