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15-Year vs 30-Year Mortgage

Lower total interest vs monthly flexibility — the math for every scenario

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.

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