15 vs 30-Year Mortgage: Payments, Interest and Which to Choose
Compare a 15-year and 30-year mortgage on a $300,000 loan: monthly payment, total interest, equity after 5 and 10 years, and when each one makes sense.
By Awais, Founder and editor-in-chiefPublished
A 15-year mortgage costs far less in total interest, but its monthly payment is much higher. A 30-year mortgage keeps the payment low and flexible, at the price of paying interest for twice as long, usually at a higher rate.
The numbers below show how big that trade-off is on a real loan. They use average rates, so treat them as a model rather than a quote. This is general information, not financial advice.
The rates used in this comparison
Freddie Mac’s Primary Mortgage Market Survey for the week of October 15, 2026 put the average 30-year fixed rate at 7.40% and the 15-year fixed rate at 6.71%. Shorter loans are usually cheaper; the CFPB explains that a shorter term generally means a lower interest rate because there is less risk to the lender.
Rates change every week and depend on your credit score, down payment and lender, so plug in your own quotes in the mortgage calculator.
The formula behind the payment
Both loans use the same fixed-rate payment formula:
P = loan amount, r = annual rate ÷ 12, n = number of monthly payments
For the 30-year loan, r = 0.074 ÷ 12 = 0.0061667 and n = 360. For the 15-year loan, r = 0.0671 ÷ 12 = 0.0055917 and n = 180.
Side-by-side: a $300,000 loan
The figures cover principal and interest only. Property taxes and insurance are the same whichever term you pick.
| 30-year at 7.40% | 15-year at 6.71% | |
|---|---|---|
| Monthly payment | $2,077.14 | $2,648.08 |
| Number of payments | 360 | 180 |
| Total paid | $747,770 | $476,654 |
| Total interest | $447,770 | $176,654 |
| Balance after 5 years | $283,569 | $231,032 |
| Balance after 10 years | $259,808 | $134,662 |
The 15-year loan costs $570.94 more per month. In return it saves $271,116 in interest, and the house is paid off 15 years sooner.
Why the gap is so large
Two forces work together. First, the 15-year loan has a lower rate, so each month’s interest charge is smaller. Second, it pays the balance down faster, so interest is charged on a smaller amount every month.
Look at the balances. After five years of payments on the 30-year loan, you still owe $283,569, so only $16,431 of the original $300,000 has been repaid. Most of each early payment goes to interest. On the 15-year loan, you would have repaid $68,968 in the same five years.
That difference is equity. If you sell or refinance after 10 years, the 15-year borrower owns about $125,000 more of the home, before any change in its value.
The middle path: a 30-year loan paid like a 15-year loan
Some borrowers take the 30-year loan for safety and voluntarily pay the 15-year amount each month. With this loan, paying $2,648.08 instead of $2,077.14 sends an extra $570.94 to principal every month.
| Strategy | Paid off in | Total interest |
|---|---|---|
| 30-year, minimum payment | 30 years | $447,770 |
| 30-year, paying $2,648.08 a month | 16 years 4 months | $216,623 |
| 15-year loan | 15 years | $176,654 |
The middle path saves $231,147 compared with the minimum payment, but costs about $40,000 more than the real 15-year loan, because the rate is higher. What you buy with that $40,000 is the right to drop back to $2,077.14 in a bad month. Before choosing it, confirm that your loan has no prepayment penalty; our guide on how extra payments shorten your mortgage covers what to check.
How to choose
A 15-year mortgage suits you if
- the higher payment fits comfortably inside the 28/36 guideline, with savings left over
- your income is stable and you have an emergency fund of several months
- you want the house paid off before a set date, such as retirement or a child’s university
- you are already saving enough for retirement, so the extra payment is not crowding that out
A 30-year mortgage suits you if
- the 15-year payment would push your housing costs above about 28% of gross income
- your income varies, or you expect big costs such as childcare
- you need the lower payment to qualify for the home you want
- you would rather keep cash flexible and prepay when you can
The lower payment also matters for approval. Lenders judge you on the required payment, so the 30-year loan can be the difference between qualifying and not. Our guide on how much house you can afford shows how the payment feeds into that test.
What about investing the difference?
A common argument for the 30-year loan is to invest the $570.94 a month instead. That only works if you actually invest it every month for years, and if your investments earn more after tax than the mortgage rate. Paying down a 7.40% mortgage is like earning a guaranteed 7.40% on that money, because every dollar repaid stops costing interest. Stock market returns are not guaranteed and can be negative for years. You can see how regular monthly savings grow at different rates with the compound interest calculator.
Other things to compare
- Monthly cash flow over time. With a fixed-rate loan, the payment stays the same while incomes usually rise, so the 15-year payment may feel heavier at first and lighter later.
- Refinancing. If rates fall, either loan can be refinanced, but refinancing has closing costs. A lower rate on the 30-year loan does not erase the interest already paid.
- Private mortgage insurance. PMI depends on your loan-to-value ratio. The 15-year loan reaches 80% of the home’s original value much sooner, so PMI usually ends sooner too.
- Points. Lenders may offer a lower rate if you pay points up front. Compare the Loan Estimates for both terms at the same points.
FAQ
Is a 15-year mortgage rate always lower than a 30-year rate?
Usually, but not by a fixed amount. In Freddie Mac’s survey for October 15, 2026, the gap was 0.69 percentage points (7.40% vs 6.71%). Your quotes may differ.
How much more is a 15-year payment than a 30-year payment?
On a $300,000 loan at those average rates, $2,648.08 vs $2,077.14, or about 27% more. The gap is smaller than many people expect because the lower rate partly offsets the shorter term.
Can I pay off a 30-year mortgage in 15 years?
Yes, if your loan has no prepayment penalty. Paying the 15-year amount on our example 30-year loan clears it in 16 years 4 months; you would need slightly more to finish in exactly 15 years because the rate is higher.
Is a 20-year mortgage a good compromise?
It can be. A 20-year term gives a payment and total interest between the two. Enter the rate a lender offers you in the mortgage calculator or the loan calculator to compare all three terms.