15-Year vs 30-Year Mortgage: Which Is Better?
Automated technical check: . Scope and review policy
A shorter loan term increases the required payment but reduces the time a balance earns interest. Compare both the monthly obligation and the cost over the period you expect to keep the home. Neither term is automatically the right choice for every borrower.
Compare the same principal and rate
Here is a $400,000 loan at an illustrative 6.5% fixed interest rate. Both options use the same rate to isolate the effect of term length. Taxes, insurance, fees and mortgage insurance are excluded; these are not current lender offers.
| Term | Monthly P&I | Total modeled interest | Balance after 5 years |
|---|---|---|---|
| 30 years | $2,528.27 | $510,177.95 | $374,443.91 |
| 15 years | $3,484.43 | $227,197.30 | $306,868.48 |
The 15-year payment is $956.16 higher each month, and modeled lifetime interest is $282,980.65 lower. The previous article overstated the 15-year interest. These numbers now come from the same engine as the Amortization Calculator.
Affordability and the time you keep the loan
A higher required payment leaves less room for emergencies and other obligations. Compare a full household budget rather than treating one income-percentage rule as proof that a loan is affordable. If you expect to sell or refinance early, lifetime interest is not the amount you will actually pay: examine interest paid and balance remaining through that date, plus transaction costs.
The table's five-year balances show one part of that comparison. They are not home values or net worth: a buyer also contributes different monthly cash amounts under each term, and the property can rise or fall in value.
A 30-year loan with voluntary extra payments
At the same rate, paying the 15-year P&I amount each month on the 30-year loan follows the shorter repayment path in this simplified model. The required payment on the contract remains different. Extra-payment allocation, fees, actual rate differences and servicing rules can change the comparison.
Use Loan Payoff with your real balance and payment, or add recurring extra principal in Amortization. The Loan Comparison Calculator compares quoted loans; it is not an extra-payment timing simulator.
Do not assume an investment outcome
A lower mortgage obligation may free cash for another use, but an assumed investment return is not guaranteed. A fair comparison must use equal starting funds and cash budgets, remaining debt at the same endpoint, fees, taxes and the opportunity to invest after the shorter loan is repaid. Comparing a 30-year investment account only with interest saved ignores those cash flows.
Request quotes for both terms rather than assuming a fixed rate discount. Review the interest rate separately from APR and closing charges. For the underlying arithmetic, see the mortgage-payment formula.