The 15 vs. 30-year choice is really a question about cash flow vs. interest savings. The numbers favor the 15-year decisively — but only if you can sustain the higher payment without stress.

The rate difference

Lenders charge less for 15-year loans because the shorter term means less risk. In mid-2026, the spread typically runs 0.5–0.75% — so if 30-year rates are 6.5%, 15-year rates are closer to 5.75–6.0%.

That gap matters. A lower rate on a smaller loan balance (because you're paying off principal faster) compounds significantly over the life of the loan.

Side-by-side: $350,000 loan

TermRateMonthly P&ITotal interestTotal cost
30-year6.50%$2,212$446,000$796,000
15-year5.85%$2,929$177,000$527,000
Difference–0.65%+$717/mo−$269,000−$269,000

$350,000 loan. 30yr at 6.5%, 15yr at 5.85%. P&I only — excludes taxes, insurance, PMI.

The 15-year loan costs $717 more per month but saves approximately $269,000 in total interest. That's not a small number — it's roughly two-thirds of the original loan amount.

Try both terms in the calculator

Use the MorgCalc 15 vs. 30-year calculator to compare both scenarios with your numbers.

Try it — adjust for your situation

$
Down payment20% — $90,000
Interest rate6.50%
Monthly payment
$3,138
P&I · Taxes · Insurance
Total interest
$459,160
Principal & Interest$2,275/mo
Property Tax$675/mo
Homeowners Insurance$188/mo
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Open the full 15 vs. 30-year comparison calculator →

The investment argument for 30 years

Some financial advisors argue for the 30-year loan: take the lower required payment, invest the $717/month difference, and earn more in the market than you save in mortgage interest.

The math can work — if you actually invest that difference consistently. Historically, the S&P 500 has returned ~10% annually before inflation. A $717/month investment at 8% annual return over 15 years grows to roughly $250,000.

But most people don't invest the difference. They spend it. The 15-year works as a forced savings mechanism — you build equity whether the market is up or down.

The honest answer: If you have the discipline to invest the payment difference every month without exception, a 30-year can work. If you're not confident in that discipline, the 15-year builds wealth automatically.

Who should choose a 15-year mortgage

  • Stable, predictable income (government, tenured employment, dual income)
  • Older buyers who want the home paid off before retirement
  • Buyers refinancing with significant equity and a lower remaining balance
  • Those who prioritize certainty over flexibility

Who should choose a 30-year mortgage

  • First-time buyers with variable income or early-career earnings
  • Anyone with high-interest debt that needs to be paid down first
  • Business owners who need cash flow flexibility
  • Buyers stretching to get into a market — lower required payment buys margin

The hybrid approach: 30-year with extra payments

A 30-year mortgage with consistent extra principal payments splits the difference: your required payment is the lower 30-year amount, but you pay down the loan faster. Making one extra payment per year on a 30-year loan at 6.5% cuts roughly 4–5 years off the loan.

The caveat: you pay 30-year rates, not 15-year rates. The extra principal payments accelerate payoff but don't recover the rate premium.

Bottom line

  • 15-year rates run ~0.5–0.75% lower than 30-year rates
  • On a $350k loan, a 15-year saves ~$269,000 in total interest
  • The 15-year payment is ~30–35% higher — make sure your budget supports it
  • 30-year with extra payments is a middle path — but you still pay the higher rate

Calculate your payment at both terms →

More resources

Already have a car loan? Your auto payment factors into your debt-to-income ratio and affects which term you can afford. Use the car payment calculator to see your full monthly debt picture before choosing a mortgage term.

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