15-year vs 30-year mortgage: which should you choose?
The shorter term saves a fortune in interest; the longer one keeps the monthly payment low. Here is how to decide which trade suits you.
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Choosing between a 15-year and a 30-year mortgage is really one question in disguise: do you want a lower payment each month, or a lower cost overall? You cannot have both, and the gap between the two is bigger than most people expect. Here is how to think it through.
What actually changes
A 15-year mortgage clears the balance in half the time, so each monthly payment is larger. But because you are borrowing the money for far fewer years, the total interest you pay is dramatically lower. A 30-year mortgage stretches the same loan over twice as long, which keeps each payment comfortably small but piles up a lot more interest by the end.
Why is the 15-year rate lower?
There is a second saving that is easy to miss: the 15-year term usually carries a lower interest rate than the 30-year, not just a shorter one. Lending money for 15 years is less risky for the lender than lending it for 30, so they charge less for it. Through 2026, Freddie Mac's weekly survey has shown the 15-year fixed rate running roughly 0.5 to 0.7 percentage points below the 30-year (see Freddie Mac's rate survey). So the shorter loan wins twice: fewer years of interest, at a lower rate on top.
A worked comparison
Take a 240,000 loan. Say the 30-year rate is 6.5% and the 15-year rate is 5.8%, roughly the real-world gap. On the 30-year term the principal and interest run about 1,517 a month, and across the full term you pay around 306,000 in interest. On the 15-year term the payment rises to about 1,999 a month, but the total interest falls to roughly 120,000. You pay about 480 more each month and save close to 185,000 in interest over the life of the loan. The lower rate is a big part of why the saving is so large.
So which is the right call?
If the higher payment fits your budget with room to spare, the 15-year term is usually the cheaper choice by a wide margin. If it would leave you stretched with no cushion for emergencies, the 30-year term is the safer one, and you can always overpay when you have spare cash to get some of the interest savings without locking into the higher required payment.
The invest-the-difference argument
There is a genuine case for the 30-year even if you can afford the 15-year. Because its required payment is lower, you could take the difference, roughly 480 a month in the example above, and invest it instead of sinking it into the house. If your long-term investment return beats your mortgage rate, you could come out ahead, and you keep the money accessible rather than locked in your walls. The catch is that it only works if you actually invest the difference every month, rather than spending it, and if you can stomach the risk. For many people the guaranteed, effortless saving of the 15-year term wins on discipline alone.
A middle path worth knowing
Many people take the 30-year mortgage for its low required payment, then voluntarily pay extra toward the principal each month. This keeps you flexible: you capture much of the interest saving in good months but can drop back to the smaller payment if money gets tight. You will not get the 15-year's lower rate this way, but you get most of its interest saving with none of the locked-in obligation. It is often the best of both worlds.
The bottom line
The 15-year term wins on total cost, helped by a lower rate, while the 30-year wins on monthly breathing room and flexibility. Put your own loan amount, both rates and both terms into our mortgage calculator and compare the monthly payment against the total interest side by side before you commit. This is general information rather than financial advice, since your income stability, other goals and risk appetite all shape the right call.
Frequently asked questions
Is a 15-year mortgage always cheaper overall?
Almost always, yes. You borrow for half as long and usually at a lower interest rate, so the total interest is far lower, often over a hundred thousand less on the same loan. The trade-off is a higher required monthly payment.
Why is a 15-year mortgage rate lower than a 30-year?
Lending for 15 years is less risky for the lender than lending for 30, so they charge less. Freddie Mac's survey has shown the 15-year fixed rate running roughly 0.5 to 0.7 points below the 30-year through 2026.
Is the monthly payment much higher on a 15-year?
Yes, but less than double, because the lower rate softens the jump. On a 240,000 loan the 15-year payment might be around 480 more a month than the 30-year, while saving well over a hundred thousand in interest.
Can I get the savings of a 15-year loan on a 30-year one?
Partly. Take the 30-year mortgage for its lower required payment, then overpay the principal when you can. You capture much of the interest saving while keeping flexibility, though not the 15-year's lower rate.
What if the 15-year payment is a stretch?
Then the 30-year term is the safer choice. A mortgage you can always afford, with a cushion for emergencies, beats a lower total cost that leaves you with no margin.