15-Year vs. 30-Year Mortgage: Which Is Better?
A 15-year mortgage costs less overall, and a 30-year mortgage is easier to afford each month. On a $320,000 loan at our example rates, the 15-year payment is $634.69 higher, but it saves $249,826 in interest.
Key takeaways
- A 15-year loan usually has a lower rate and costs far less interest, but its payment is much higher: $2,657.31 versus $2,022.62 a month in our example.
- In Freddie Mac's weekly survey, 15-year rates have been lower than 30-year rates every week since 1991. Since 2010 the gap has usually been half a point to a full point.
- Taking the 30-year loan and investing the difference only wins in our example if your investments earn more than about 7.75% a year, and no return is guaranteed.
- You can meet in the middle with a 20-year loan, or with a 30-year loan plus extra payments. Adding $764.93 a month pays our example loan off in 15 years.
- Choose the 15-year loan only if its payment still leaves room for an emergency fund and retirement savings.
15-year vs. 30-year mortgage: side by side
Take a $320,000 loan, such as a $400,000 home with 20% down. Suppose a lender quotes 6.5% for 30 years and 5.75% for 15 years. These are example rates, not current offers. The comparison below starts with these numbers and updates as you type your own.
Payments are principal and interest only. Taxes, insurance and any PMI come on top for either loan. We explain the middle-ground and investing figures below.
Here's how the example loans pay down over time:
| 30-year at 6.5% | 15-year at 5.75% | |
|---|---|---|
| Monthly payment | $2,022.62 | $2,657.31 |
| Principal paid in month 1 | $289.29 | $1,123.98 |
| Balance after 5 years | $299,555 | $242,082 |
| Balance after 10 years | $271,284 | $138,281 |
| Balance after 15 years | $232,189 | $0 |
| Total interest | $408,142 | $158,316 |
| Total paid | $728,142 | $478,316 |
In the first month, the 15-year loan puts almost four times as much toward your balance. After 15 years it's paid off, while the 30-year loan still has $232,189 left, nearly three-quarters of the original amount. Over 30 years, the longer loan's interest adds up to more than the amount borrowed. Our guide to how amortization works explains why early payments are mostly interest.
How much lower are 15-year rates?
Lenders usually charge less interest on a 15-year loan. Freddie Mac reports average rates each week in its Primary Mortgage Market Survey. Since the survey added 15-year loans in 1991, the average 15-year rate has been lower than the 30-year rate every week through October 2026. The gap has ranged from about 0.2 to 1.0 percentage point. Since 2010 it has usually been between half a point and a full point, and over the past five years it has averaged about three-quarters of a point. In 2026 it has been a bit narrower, mostly 0.6 to 0.7 point.
That's why our example uses a 0.75-point gap. Your own quotes depend on your credit, down payment and lender, and the CFPB notes that rates vary among lenders, especially for shorter terms. Compare quotes for both terms from the same lenders on the same day.
What if you take the 30-year loan and invest the difference?
A popular argument for the 30-year loan: take the lower payment, invest the $634.69 difference each month, and let your investments outgrow the extra interest. Whether that works depends on your return. Here's a fair test:
- Both borrowers spend the same $2,657.31 a month for 30 years.
- The 30-year borrower pays $2,022.62 on the mortgage and invests $634.69 every month for 30 years.
- The 15-year borrower pays off the loan in 15 years, then invests the full $2,657.31 every month for the next 15 years.
- Investments earn a steady average annual return, compounded monthly. Taxes, fees and the mortgage interest deduction are left out.
After 30 years both homes are paid off, so the investment balances are the only difference:
| Average return | 15-year borrower | 30-year borrower | Who's ahead |
|---|---|---|---|
| 4% a year | $653,939 | $440,506 | 15-year, by $213,433 |
| 6% a year | $772,795 | $637,556 | 15-year, by $135,239 |
| 8% a year | $919,531 | $945,916 | 30-year, by $26,385 |
| 10% a year | $1,101,376 | $1,434,709 | 30-year, by $333,333 |
In this example the break-even return is about 7.75% a year. Above it, the 30-year loan plus investing comes out ahead. Below it, the 15-year loan wins. The hurdle is above the 30-year loan's 6.5% rate because you also give up the 15-year loan's lower 5.75% rate. If both loans charged 6.5%, the break-even would be exactly 6.5%. You can check these balances with our compound interest calculator.
Before you bet on investing the difference, weigh these points:
- Returns aren't guaranteed. Stock prices swing from year to year, and a bad stretch can leave the investing plan behind. The 15-year loan's savings are locked in when you sign.
- It takes discipline. The plan only works if you invest the difference every month for 30 years, including when money is tight or markets fall.
- Taxes matter. Taxes on investment gains raise the return you'd need, though a 401(k) or IRA can reduce or delay them. The mortgage interest deduction helps only if you itemize (see the FAQ below).
Middle grounds: a 20-year loan or extra payments
You don't have to pick an extreme. Here are five ways to repay the same $320,000 loan:
| Option | Monthly payment | Total interest | Paid off in |
|---|---|---|---|
| 30-year at 6.5% | $2,022.62 | $408,142 | 30 years |
| 30-year + $200 extra | $2,222.62 | $302,714 | 23 years 5 months |
| 20-year at 6.125% | $2,315.72 | $235,772 | 20 years |
| 15-year at 5.75% | $2,657.31 | $158,316 | 15 years |
| 30-year + $764.93 extra | $2,787.55 | $181,757 | 15 years |
A 20-year mortgage
Freddie Mac's survey doesn't track 20-year loans, so we assume 6.125%, halfway between the 15- and 30-year rates. The 20-year payment is then $293.10 a month more than the 30-year payment, and it saves $172,370 in interest. Compared with the 15-year loan, it costs $341.59 a month less but $77,456 more in interest. Ask lenders for a 20-year quote too.
A 30-year mortgage with extra payments
To pay off the 30-year loan in 15 years at its 6.5% rate, you'd add $764.93 a month, for a total of $2,787.55. That's about $130 a month more than the 15-year payment, and it costs $23,441 more in interest because the rate is higher. What you get for that is flexibility: if money gets tight, you can drop back to the required $2,022.62 in any month.
Smaller amounts help too. An extra $200 a month pays the loan off in 23 years and 5 months and saves about $105,000 in interest. Try your own amount with our mortgage payoff calculator.
Before you pay extra, ask your servicer to apply the money to principal, and check your Loan Estimate or loan documents for a prepayment penalty. Not every mortgage has one, and the CFPB says they don't normally apply to small extra principal payments, but confirm with your lender.
Pros and cons
15-year mortgage: pros
- Far less interest: $158,316 instead of $408,142 in our example.
- Usually a lower interest rate.
- Builds equity fast. After five years you'd have paid off $77,918 of the loan, versus $20,445 with the 30-year loan.
- Debt-free in 15 years, which helps if you want to retire without a house payment.
- If you put less than 20% down, PMI ends sooner. With 10% down on a $400,000 home at our example rates, it would end automatically after 2 years 11 months instead of 9 years 1 month, as long as you're current on payments. See how to get rid of PMI.
15-year mortgage: cons
- A much higher required payment: $634.69 more a month in our example.
- Harder to qualify for, because the higher payment raises your debt-to-income ratio.
- Less room in your budget for saving, investing and emergencies.
- Money you put into the house is hard to get back out without selling, borrowing against the home or refinancing.
30-year mortgage: pros
- The lowest required payment, which leaves more room in your budget.
- Easier to qualify for.
- Flexible: you can pay extra when you can and stop when you can't.
- The payment is fixed, so it gets easier to manage if your income grows.
30-year mortgage: cons
- Far more interest: $408,142 in our example, more than the amount borrowed.
- Usually a higher interest rate.
- Slow equity growth at first: only $289.29 of the first $2,022.62 payment goes toward your balance.
- Payments may continue into retirement.
Which one should you choose?
Start from the payment you can comfortably handle, not the most a lender will approve. Our home affordability calculator can help.
A 15-year mortgage may suit you if:
- Your income is steady and the higher payment still leaves room in your budget.
- You already have an emergency fund and you're on track with retirement savings.
- You want the house paid off by a set date, such as before you retire.
- You'd rather have a guaranteed saving than a possible investment gain.
A 30-year mortgage may suit you if:
- You're stretching to buy, or your income changes from month to month.
- You still need to build an emergency fund, pay off higher-interest debt or save more for retirement.
- You'll invest the difference every month and can live with market ups and downs.
- You want flexibility. You can always pay extra on a 30-year loan, but you can't pay less than the 15-year payment.
A quick test: could you still make the 15-year payment if your income dropped or a big bill arrived? If not, a 30-year loan with extra payments when you can afford them is the safer path.
Frequently asked questions
Is a 15-year mortgage harder to qualify for?
It can be. Lenders look at your debt-to-income ratio: all your monthly debt payments divided by your gross monthly income. The 15-year loan's higher payment raises that ratio, so you may qualify for a smaller loan on a 15-year term. Check yours with our debt-to-income ratio calculator.
Can I switch from a 30-year to a 15-year mortgage later?
Yes. You can refinance into a 15-year loan, which means new closing costs and whatever rates are available then. Our refinance calculator shows how long it takes to break even. Or keep your loan and pay extra each month: in our example, $764.93 extra a month pays off the 30-year loan in 15 years without refinancing.
Does paying extra lower my monthly payment?
Usually not. On a standard fixed-rate mortgage, extra principal payments shorten the loan and cut the interest you pay, but the required payment stays the same until the loan is paid off.
Is the mortgage interest deduction a reason to choose a 30-year loan?
Not by itself. You can deduct mortgage interest only if you itemize deductions instead of taking the standard deduction. Even then, the deduction returns only part of what you pay. In the 22% federal tax bracket, for example, $1,000 of interest saves at most $220 in federal income tax, so you're still $780 out of pocket.
Should I get a 15-year mortgage if I'm close to retirement?
Being mortgage-free in retirement lowers the income you'll need, and a shorter loan can get you there. But don't cut retirement contributions or drain your savings to afford the payment. A 30-year loan with extra payments works toward the same goal and keeps a safety valve.
This guide is general education, not financial advice. Our example rates are for illustration, not current offers. For help with your decision, consider a HUD-approved housing counselor, often available at little or no cost, or a qualified financial professional. See our terms of use.
Last reviewed: October 2026