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15-Year vs 30-Year Mortgage
Lower total interest vs monthly flexibility — the math for every scenario
15-Year Mortgage
Pay off faster, less interest
VS
30-Year Mortgage
Lower payments, more flexibility
| Factor | 15-Year Mortgage | 30-Year Mortgage |
|---|
| Interest Rate |
Typically 0.5–0.75% lower than 30-year |
Standard market rate |
| Monthly Payment (on $400k loan) |
~$2,800–$3,000 |
~$2,100–$2,300 |
| Total Interest ($400k @ 6.5%/7%) |
~$130,000 |
~$315,000 |
| Interest Savings |
~$185,000 on $400k loan |
baseline |
| Build Equity |
Faster — more principal per payment early on |
Slower — mostly interest for first 10–15 years |
| Cash Flow Flexibility |
Low — committed to higher payment |
High — can pay extra but not obligated |
| Opportunity Cost |
Higher payments mean less to invest |
Lower payments free up cash to invest |
| Break-Even vs Investing |
If investments earn >6.5%, 30yr+investing often wins |
If investments earn <6.5%, 15yr wins |
| Best For |
Those who want guaranteed debt elimination; near retirement |
Those with investment discipline; uncertain income; want flexibility |
⚖️ The Verdict
At current interest rates (6.5–7%+), the 15-year mortgage is more attractive than historically. When your mortgage rate exceeds expected investment returns, guaranteed debt elimination wins. The 30-year wins mathematically if you actually invest the difference — but most people don't. The 30-year with deliberate extra principal payments is the most flexible strategy: you get the lower obligated payment but can pay it off like a 15-year when cash flow allows. One rule: always get the 30-year if it's within 5 years of your expected retirement.