30-year vs 15-year mortgage: the real trade-off, with the numbers

The 15-year loan is the disciplined choice; the 30-year is the flexible one. Which is right depends less on interest math than on what else your money needs to do.

The math on $300,000

At illustrative rates of 6.5% for 30 years and 5.9% for 15 years (15-year rates typically run half a point to three-quarters of a point lower):

	30-year at 6.5%	15-year at 5.9%
Monthly principal & interest	$1,896	$2,516
Total interest over the term	$382,633	$152,804
Balance after 5 years	about $280,900	about $221,500
Equity built in 5 years (excluding appreciation)	about $19,100	about $78,500

The 15-year saves roughly $230,000 in interest for $620 more per month. Run your own numbers with our payment tables, which show both terms side by side.

The case for 15 years

A lower rate, a mortgage gone before retirement or college bills, and forced savings that do not depend on willpower. Borrowers with stable, ample income and an emergency fund already in place often find the 15-year payment disciplines them into wealth they would not otherwise build.

The case for 30 years

Flexibility. A 30-year loan with extra principal payments can be paid off in 15 years — but if income drops, you can fall back to the lower required payment. The 15-year offers no such relief. The 30-year also qualifies you for a larger loan (the lower payment lowers DTI), keeps cash available for retirement accounts that may earn more than the mortgage rate, and leaves room for the unexpected. For first-time buyers with thin reserves, the 30-year is usually the safer choice.

A middle path

Take the 30-year, then pay the 15-year amount whenever you can. Most loans have no prepayment penalty; confirm yours. One extra principal payment a year on a 30-year loan shortens it by several years. The discipline is on you, but the safety margin is real — and you can refinance into a 15-year later if rates allow.

Frequently asked questions

Is a 20-year mortgage a good compromise?

Often, yes: a rate usually between the two, a payment closer to the 30-year’s, and a term that ends before most people retire. Fewer lenders advertise it, but most offer it.

Does the 15-year build equity faster only because of the shorter term?

Mostly, yes: a larger share of each payment goes to principal from the first month. The lower rate helps, but the term is the main driver.

What if I plan to move in seven years?

Then total interest over 30 years is irrelevant; what matters is the balance when you sell and the payment while you live there. The 15-year leaves you with far more equity at year seven, the 30-year with far more monthly cash. Price both against your other savings goals.