15-Year vs 30-Year Mortgage — Which Saves You More? (2026)
A 15-year mortgage has a lower rate and saves a staggering amount in interest — but the higher monthly payment isn't for everyone. The right choice depends on your budget, goals, and what else you'd do with the extra money.
Compare 15-year vs 30-year payments side by side with the Mortgage Calculator→Side-by-Side Comparison ($400,000 Home, 20% Down)
| Feature | 15-Year | 30-Year |
|---|---|---|
| Loan amount | $320,000 | $320,000 |
| Interest rate | 5.80% | 6.50% |
| Monthly P&I | $2,676 | $2,023 |
| Monthly difference | +$653 | — |
| Total interest paid | $161,700 | $408,300 |
| Interest savings | $246,600 | — |
| Paid off in | 2041 | 2056 |
The 15-year mortgage saves $246,600 in interest and builds equity twice as fast. But it costs $653 more per month.
Compare 15-year vs 30-year for your loan amount→The Monthly Payment Gap
| Home Price (20% Down) | 15-Year Payment | 30-Year Payment | Monthly Difference |
|---|---|---|---|
| $300,000 | $2,007 | $1,517 | $490 |
| $400,000 | $2,676 | $2,023 | $653 |
| $500,000 | $3,345 | $2,528 | $817 |
| $600,000 | $4,014 | $3,034 | $980 |
| $750,000 | $5,018 | $3,793 | $1,225 |
At higher home prices, the gap becomes substantial — over $1,000/month for a $750,000 home.
Total Cost Over the Life of the Loan
This is where the 15-year mortgage shines:
| Metric | 15-Year ($320k loan) | 30-Year ($320k loan) |
|---|---|---|
| Total payments | $481,700 | $728,300 |
| Principal repaid | $320,000 | $320,000 |
| Total interest | $161,700 | $408,300 |
You pay the same $320,000 in principal either way. The difference is $246,600 in interest — money that stays in your pocket with a 15-year term.
When 15-Year Wins
You Can Comfortably Afford It
"Comfortably" means the higher payment is ≤ 25% of your gross income and you still have room for savings and emergencies. Don't stretch.
You're Close to Retirement
If you're 50 and want to retire at 65, a 15-year mortgage means a paid-off home in retirement. A 30-year extends payments to age 80.
You Want Forced Discipline
The higher payment forces you to build equity. If you'd otherwise spend the difference rather than invest it, the 15-year is more effective.
You Prioritize Being Debt-Free
For some people, the psychological benefit of owning their home outright is worth the higher monthly cost.
When 30-Year Wins
You Need Payment Flexibility
The lower 30-year payment gives you breathing room. You can always make extra payments toward principal — effectively creating a self-imposed 15-year schedule — while retaining the option to pay less during tough months.
You'd Invest the Difference
If you take a 30-year and invest the $653/month difference in the stock market at 8-10% average return:
| 15-Year Mortgage | 30-Year + Invest Difference | |
|---|---|---|
| Monthly payment | $2,676 | $2,023 |
| Monthly investment | $0 | $653 |
| After 15 years: Home equity | $320,000 (paid off) | ~$185,000 |
| After 15 years: Investment portfolio | $0 | ~$238,000 |
| After 15 years: Net worth contribution | $320,000 | $423,000 |
If you actually invest the difference (and earn a return above your mortgage rate), the 30-year + invest strategy builds more wealth. The key word is "actually" — most people don't invest the difference.
You're Early in Your Career
A lower payment at 28 gives you flexibility for career changes, family planning, and other financial goals. You can always refinance to a 15-year later.
Your Other Debts Have Higher Interest
If you have student loans at 7%, credit cards at 20%, or other high-interest debt, the extra $653/month is better used paying those down first.
The Middle Ground: 30-Year with Extra Payments
Take the 30-year for flexibility, but make extra principal payments when you can:
| Extra Monthly Payment | Payoff Time | Total Interest | Interest Saved vs 30-Year |
|---|---|---|---|
| $0 (standard 30-year) | 30 years | $408,300 | — |
| $200/month extra | 23 years | $305,000 | $103,300 |
| $400/month extra | 19 years | $237,000 | $171,300 |
| $653/month extra (match 15-year) | 15.5 years | $177,000 | $231,300 |
This approach gives you 90% of the 15-year interest savings with 100% of the 30-year flexibility.
Rate Difference
15-year mortgages typically carry rates 0.5-0.75% lower than 30-year:
| Period | 30-Year Rate | 15-Year Rate | Difference |
|---|---|---|---|
| Current (Feb 2026) | ~6.50% | ~5.80% | 0.70% |
| Historical average | ~7.0% | ~6.3% | 0.70% |
The lower rate amplifies the savings — you're not just paying for fewer years; you're paying a lower rate on each year's balance.
Tax Implications
Mortgage interest is deductible if you itemize. With a 30-year mortgage, you pay more interest — which means a larger deduction.
| 15-Year | 30-Year | |
|---|---|---|
| Year 1 interest | ~$18,300 | ~$20,700 |
| Tax savings (24% bracket) | $4,392 | $4,968 |
The 30-year provides ~$576 more in year 1 tax savings. Over time, this narrows as the 15-year principal balance drops faster.
However, with the $15,700 standard deduction (single) or $31,400 (married), many homeowners don't itemize at all — making this difference irrelevant. See Mortgage Interest Deduction for details.
FAQ
Can I refinance from 30-year to 15-year later?
Yes, if rates drop or your income increases. Refinancing costs 2-5% of the loan amount in closing costs, so make sure the savings justify the expense.
What about a 20-year mortgage?
Some lenders offer 20-year terms. The rate is typically between 15 and 30-year rates, and the payment is more manageable than a 15-year. It's a solid compromise if available.
Is a 15-year mortgage harder to qualify for?
Yes, because the higher payment affects your debt-to-income ratio. You need higher income to qualify for the same loan amount on a 15-year term.
What if I can barely afford the 15-year payment?
Don't do it. Take the 30-year and make extra payments when you can. Being stretched to the limit on a 15-year leaves no room for emergencies.
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