15-Year vs 30-Year Mortgage: How to Compare Lifetime Cost
The 15-year mortgage is a better deal mathematically; the 30-year mortgage is a better deal for cash flow. The only honest answer to "which should I pick?" is "run the numbers for your situation" — but here's how the numbers actually break down on a $320,000 loan.
The headline difference
Take a $320,000 loan principal at typical 2026 rates (15-year fixed: 5.75% APR; 30-year fixed: 6.5% APR — historically 15-year rates run about 0.5–0.75% lower).
| Metric | 15-year @ 5.75% | 30-year @ 6.5% | Difference |
|---|---|---|---|
| Monthly P&I | $2,658.36 | $2,022.62 | +$635.74 (15-yr) |
| Total interest paid | $158,505 | $408,143 | +$249,638 (30-yr) |
| Total paid | $478,505 | $728,143 | +$249,638 (30-yr) |
| Years to debt-free | 15 | 30 | +15 yrs (30-yr) |
The 30-year payment is $636/month easier on cash flow. Over the life of the loan, that easier cash flow costs you $249,638 in extra interest — about 78% of the original loan.
Why the gap is so big
Two effects compound:
- The longer the term, the longer your balance stays high. On a 30-year loan at 6.5%, after 10 years you've paid $242,715 — and you still owe $271,287 on the original $320,000. Most of those payments went to interest.
- 15-year rates are lower. Lenders charge less because their money is at risk for half as long. The 0.5–0.75% rate gap doesn't sound like much; on a 15-year payback it saves about $30,000 in interest by itself.
The "save the difference and invest it" rebuttal
The standard counter-argument: take the 30-year loan, invest the $635/month difference in the stock market at 7–10% annual return, and you come out ahead because the market beats your mortgage rate. The math works in theory. In practice:
- You have to actually invest it. Most people who pick a 30-year loan because it has lower payments do not, in fact, then invest the difference in an S&P 500 index fund every month for 30 years. They spend it.
- Returns are uncertain; the mortgage interest is certain. Paying down a 6.5% mortgage is a guaranteed 6.5% return. The market's long-run average is higher but with significant variance.
- Debt-free has psychological value. Owning the house outright at age 50 versus 65 changes which jobs you can take and what risks you can absorb.
When the 30-year is the better choice
- You can't afford the 15-year payment without stress. A mortgage payment that crowds out emergency savings, retirement contributions, or basic life is too big. The cheaper monthly is the right call.
- Your income is variable. Self-employed, commission-heavy, or in a cyclical industry — having a lower required payment with the option to prepay gives you flexibility.
- You're maxing out tax-advantaged accounts. If you're contributing the full match to your 401(k), funding an HSA, and filling up an IRA, the case for the longer term to free up that cash is much stronger.
When the 15-year is the better choice
- You can afford it without strain. The 15-year payment fits comfortably in your budget alongside retirement savings.
- You're refinancing later in life. Going from a 30-year at year 7 to a 15-year refinance shortens your total horizon to roughly the same place but at the lower 15-year rate.
- You're disciplined but want the discipline forced on you. The 15-year contract makes the bigger payment mandatory. If you'd otherwise pick the 30-year and "pay extra," but suspect you wouldn't, the 15-year removes the choice.
The hybrid: 30-year mortgage, 15-year payment
Because most US mortgages allow prepayment with no penalty, you can take a 30-year loan and pay it like a 15-year. Send $2,658/month instead of $2,022/month, and you'll pay it off in roughly 16 years and save most of the interest gap. Two trade-offs:
- You're still paying the 30-year's higher rate, so it's not quite as efficient as a true 15-year loan. The $30,000 rate-gap savings are gone.
- You keep the optionality. If your income drops, you can revert to the contractual 30-year payment of $2,022.
For most people who can afford the 15-year payment but want a safety hatch, this is the right answer.
Run your own scenario
Use our mortgage calculator with your actual loan amount, your local property tax rate, and current rates from a rate-aggregator site. Run both 15 and 30 years and compare:
- Total PITI (not just P&I) — make sure both fit your budget
- Year 5 balance — useful if you might move or refinance
- Total interest paid — the real "cost of money" over the loan
If you're new to PITI as a concept, read our PITI explainer first — total PITI is what your lender will evaluate against your income, not just principal and interest.