Overview
A 15-year mortgage has higher monthly payments but saves you tens of thousands in interest and builds equity twice as fast. A 30-year mortgage keeps payments affordable but costs significantly more over time. The right choice depends on your monthly budget, financial goals, and risk tolerance.
Side-by-Side Comparison
| Feature | 15-Year Mortgage | 30-Year Mortgage |
|---|---|---|
| Monthly Payment (on $360K at 6.75%) | ~$3,181/mo | ~$2,335/mo |
| Total Interest Paid | ~$212,500 | ~$480,600 |
| Interest Savings | Save ~$268,000 vs 30-year | N/A — baseline |
| Interest Rate | Typically 0.5-0.75% lower | Higher rate |
| Equity Building | Much faster — own home in 15 years | Slower — most early payments go to interest |
| Payment Flexibility | Less — higher required payment | More — lower required payment |
| Qualification | Harder — higher DTI impact | Easier — lower monthly obligation |
| Tax Deduction | Less interest to deduct | More interest deduction (if itemizing) |
Pros & Cons
15-Year Mortgage
Advantages
Save $100K-$300K+ in total interest over the life of the loan
Lower interest rate (typically 0.5-0.75% less)
Build equity twice as fast
Own your home free and clear in 15 years
Forced savings discipline
Disadvantages
Monthly payment is 30-50% higher
Less cash available for investing, emergencies, or lifestyle
Harder to qualify — higher DTI ratio
Less flexibility if income drops
30-Year Mortgage
Advantages
Lower monthly payment — more affordable
Extra cash can be invested elsewhere (potentially earning more than mortgage rate)
Easier to qualify for a larger loan
More financial flexibility for emergencies
Can always pay extra to mimic a 15-year schedule
Disadvantages
Pay significantly more total interest
Higher interest rate
Slower equity building
Still making payments for 30 years
When to Choose Each Option
Choose 15-Year Mortgage if...
Choose a 15-year mortgage if you can comfortably afford the higher payment (it should be no more than 25% of your gross income), you want to be mortgage-free sooner, and you're already contributing to retirement accounts. It's ideal for borrowers in their 40s-50s who want to enter retirement debt-free.
Choose 30-Year Mortgage if...
Choose a 30-year mortgage if you want lower required payments, plan to invest the difference, or need the flexibility. Many financial advisors suggest taking a 30-year and making extra payments when possible — you get the safety of low required payments with the option to accelerate.
The Bottom Line
The 30-year mortgage with disciplined extra payments offers the best of both worlds: low required payments for safety, with the ability to pay it off faster when cash flow allows. However, if you have the discipline and income, a 15-year mortgage guarantees the interest savings. Use our extra payment calculator to see how a 30-year with extra payments compares to a straight 15-year.
Run the Numbers
Frequently Asked Questions
On a $360,000 loan, a 15-year mortgage saves approximately $268,000 in total interest compared to a 30-year. The exact savings depend on your interest rate and loan amount.
Yes, some lenders offer 20-year and 25-year terms as a middle ground. You can also take a 30-year mortgage and make extra payments to effectively create any payoff timeline you want.
If your mortgage rate is below your expected investment return (historically 7-10% for stocks), investing the difference may build more wealth. However, paying off your mortgage provides a guaranteed return equal to your interest rate and the psychological benefit of being debt-free.