On a $400,000 mortgage at 7% interest: the 15-year costs $3,592/month but you pay $246,000 in total interest. The 30-year costs $2,661/month but you pay $558,000 in total interest. That's $312,000 more — but the monthly difference is $931. What would you do with that $931?
The Real Comparison: Monthly Savings Invested
The 30-year borrower saves $931/month vs the 15-year borrower. If they invest that $931/month in an S&P 500 index fund at 8% average return for 30 years, they accumulate approximately $1.28 million. The 15-year borrower pays off the house in 15 years, then invests the full $3,592/month for the remaining 15 years — accumulating approximately $1.24 million. The 30-year with investments wins by ~$40,000 in this scenario.
Run Your Own Numbers
When the 15-Year Wins
- •Your investment return is lower than your mortgage rate (rare but possible in volatile markets)
- •You lack the discipline to actually invest the difference — forced savings via mortgage is real
- •You're close to retirement and want a paid-off home before you stop working
- •You value the guaranteed "return" of debt elimination over market risk
When the 30-Year Wins
- •You'll reliably invest the monthly difference
- •You have variable income and need the lower payment flexibility
- •You're early in your career with high expected income growth
- •Your mortgage rate is low (under 5%) — the math strongly favors investing at those rates
The hybrid approach: Take the 30-year mortgage for flexibility, but make extra principal payments when cash flow allows. You get payment flexibility in tight months and interest savings when you can afford it.
The 15-year mortgage saves money on paper. The 30-year mortgage may build more wealth in practice — if you invest the difference. The math is close. Your discipline is the deciding variable.
Frequently Asked Questions
What's the monthly payment difference between 15 and 30-year mortgages?
On a $350,000 loan at 7% (30-year) vs 6.5% (15-year), the monthly P&I payment is roughly $2,329 vs $3,050 — a difference of $721/month. The 15-year payment is about 31% higher, but you pay off the loan in half the time.
Run the numbers yourself →How much total interest do I save with a 15-year mortgage?
On a $350,000 loan at those rates you'd pay roughly $488,000 total with a 30-year mortgage vs $549,000 — wait, the 15-year wins dramatically. Total interest on 30-year ≈ $487,940; on 15-year ≈ $199,000. You save close to $290,000 in interest by choosing the shorter term.
Should I choose a 15-year or 30-year mortgage?
Choose a 15-year if you can comfortably handle the higher payment and plan to stay long-term — you'll build equity faster and save enormously on interest. Choose a 30-year if cash flow is tight, you have high-interest debt, or you want flexibility to invest the difference. Many financial planners suggest 30-year + extra payments for maximum flexibility.
Can I pay off a 30-year mortgage early by making extra payments?
Yes. Adding just $200/month extra to a $350,000, 30-year mortgage at 7% cuts about 5 years off the loan and saves roughly $85,000 in interest. Adding one extra full payment per year (bi-weekly payments) can shave 4–6 years off a 30-year term.
Calculate your payoff with extra payments →What are typical 15-year and 30-year mortgage rates in 2025?
In early 2025, 30-year fixed rates hover around 6.5–7.5% and 15-year fixed rates around 6.0–7.0%, depending on credit score, loan size, and lender. The 15-year rate is typically 0.5–0.75% lower because lenders take less risk on a shorter loan. Rates change weekly — always get quotes from at least three lenders.