15-Year vs 30-Year Mortgage

The cheaper monthly payment (30) costs you tens of thousands more in interest. The smaller total cost (15) costs you flexibility. See both, on your loan, in real numbers.

Your loan

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15-year mortgages typically run 50–100 bps lower than 30-year. Rates above default to that gap; adjust to current market.

15-year

Monthly payment

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Total interest paid

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Total cost (principal + interest)

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30-year

Monthly payment

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Total interest paid

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Total cost (principal + interest)

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Equity buildup over time

Remaining balance — 15yr Remaining balance — 30yr

How to think about this

The 30-year is a hedge against the unexpected — lower required payment means more breathing room if income drops, an emergency hits, or you want to invest the difference elsewhere. The 15-year is a forcing function — you'll be debt-free much sooner and pay far less interest, but you're committing to a higher monthly burden.

One useful frame: a 30-year mortgage with extra principal payments equal to the 15-year difference gets you most of the way to the 15-year outcome with the option to skip the extra payments in any month you can't afford them. The 15-year doesn't have that option.

The math

Both use the standard fully-amortizing fixed-rate formula:

M = P · r(1+r)n / ((1+r)n − 1)

where r is the monthly rate (APR ÷ 12) and n is the total payments (years × 12). With a 15-year loan, n=180; for 30-year, n=360. The lower n drives the higher monthly payment but radically less total interest.

FAQ

What rate gap should I assume?

Historically 15-year rates run 0.5–1.0 percentage points lower than 30-year. The Freddie Mac PMMS publishes weekly averages. The defaults above (5.75% / 6.5%) match recent mid-2020s averages.

Should I take the 15-year if I can afford it?

Maybe. The discipline of the smaller balance + faster payoff is real. But so is the loss of optionality. A common compromise: take the 30-year and direct-deposit extra principal payments equal to what a 15-year would cost.

Doesn't the 30-year free up money for investing?

Yes — and at long-term equity returns (~7% real), money invested instead of paid into principal often comes out ahead. But that requires you to actually invest the difference, not spend it.