30-Year vs 15-Year Mortgage Comparison
Compare a 30-year and 15-year fixed-rate mortgage for the same loan amount. See which option saves more in total interest and what extra monthly payment it costs you.
30-Year vs 15-Year: The Math
The 15-year mortgage costs roughly half the interest of a 30-year for the same loan amount. On a $350,000 loan at typical May 2026 rates (6.85% 30-year, 5.95% 15-year per Freddie Mac PMMS), the 30-year pays approximately $475,000 in lifetime interest vs $180,000 on the 15-year — a difference of $295,000.
The catch: 15-year monthly payments are 40-50% higher. For the same $350,000 loan, the 15-year payment is roughly $2,950 vs $2,300 for the 30-year — a $650/month difference. That cash difference is the real decision point: can you afford the higher payment, and would that money work harder invested elsewhere? Source: Freddie Mac Primary Mortgage Market Survey. Last updated: May 2026.
When the 15-Year Makes Sense
Choose 15-year if (1) you have 15-20 years until retirement and want a debt-free home before retirement income drops, (2) your income is stable and well above the 15-year payment plus 28% of gross — your housing-debt ratio remains comfortable, (3) you're in a lower tax bracket where the mortgage interest deduction has limited value, and (4) you're confident you won't move within 7-10 years (otherwise the rate-spread advantage is lost).
When the 30-Year Wins
Choose 30-year if (1) you're younger and the payment difference invested in an S&P 500 index fund or 401(k) match historically beats the 0.75-1.00% rate gap, (2) you value cash flow flexibility for emergencies or business opportunities, or (3) you want the option to make extra principal payments voluntarily (most 30-year loans allow this — effectively giving you 15-year payoff timing at 30-year flexibility). The Federal Reserve consistently shows lower default rates on 30-year loans because monthly payment shock is lower (federalreserve.gov data).
Hybrid Strategy: 30-Year With Extra Principal
The optimal approach for most disciplined borrowers is a 30-year loan with voluntary extra principal payments equal to a 15-year payment. This achieves 15-year payoff timing without locking you into the higher minimum payment — if your income temporarily drops, you fall back to the smaller required payment without restructuring the loan. Run this calculator against the extra-payment calculator to compare exact savings.
Frequently Asked Questions
How much extra do I pay monthly on a 15-year vs 30-year?
Typically 40-50% more. On a $350,000 loan at May 2026 rates, the 30-year payment is around $2,295/month, and the 15-year is around $2,945/month \u2014 a $650/month difference. The exact spread depends on the rate gap between the two products (usually 0.75-1.00%).
Why is the 15-year mortgage rate lower?
Lenders charge a lower rate on 15-year loans because they have less duration risk \u2014 they get their capital back twice as fast, exposing them to fewer years of potential rate or inflation changes. The 0.75-1.00% rate gap also incentivizes the higher payment, which means lower default risk for the lender.
Will I save more by choosing 15-year or by investing the difference?
Mathematically, if you can earn more than the 15-year mortgage rate (~5.95% in 2026) on the monthly payment difference, you come out ahead with the 30-year. Historically, S&P 500 returns have averaged 10% nominal \u2014 making the 'invest the difference' approach mathematically favorable for long horizons. However, this requires discipline (most people spend the difference rather than invest it).
Can I refinance from 30-year to 15-year later?
Yes. Many homeowners refinance from 30-year to 15-year once their income grows or after a major debt payoff. Watch closing costs ($3,000-$8,000 typical) and run the break-even math \u2014 refinancing makes sense if you'll stay 4-6+ years and rates haven't risen significantly since your original loan.
Does choosing 15-year reduce my mortgage interest tax deduction?
Yes. Lower total interest means less deductible interest. However, only the 13% of US homeowners who itemize benefit from this deduction (the standard deduction is high enough that most households take it). Source: IRS.gov standard deduction tables and Schedule A statistics.
What's the break-even point between 15-year and 30-year mortgages?
If you sell or refinance within 4-5 years, the 30-year typically wins on cash flow and the rate-gap advantage doesn't compound long enough. If you'll hold the loan 7+ years, the 15-year's interest savings begin to dominate. Beyond 15 years, the 15-year always wins on raw interest paid.