15-Year vs 30-Year Mortgage: Full Comparison

The 15-year saves $267,000 — but costs $1,058 more every month

On a $350,000 mortgage, a 15-year term at 5.75% costs $2,907/month with $173,310 in total interest. A 30-year term at 6.25% costs $2,155/month with $426,011 in total interest. The 15-year option saves $252,701 in interest (after accounting for the lower rate), but requires $752 more per month. The question is whether that extra monthly cost is worth the savings.

Side-by-side comparison

	15-year (5.75%)	30-year (6.25%)	Difference
Monthly P&I	$2,907	$2,155	+$752
Total interest	$173,310	$426,011	−$252,701
Total paid	$523,310	$776,011	−$252,701
Own home free and clear	Year 15	Year 30	15 years sooner
Interest rate (typical)	5.75%	6.25%	0.50% lower

The 15-year term almost always comes with a lower interest rate — typically 0.25–0.75% below the 30-year rate. This compounds the savings beyond just the shorter term.

The opportunity cost argument

The 30-year advocates have a legitimate point: the $752/month difference could be invested instead.

If you take the 30-year mortgage and invest $752/month at 7% for 15 years:

• Investment balance after 15 years: ~$237,800
• Remaining mortgage balance: ~$245,200

At year 15, you have almost enough invested to pay off the remaining mortgage. By year 20, your investments ($395,000) exceed the remaining balance ($169,000) by a wide margin.

But this only works if you actually invest the difference. Most people who choose the 30-year do not invest the savings — they spend it. The 15-year mortgage is a forced savings vehicle with a guaranteed return equal to your interest rate.

Income requirements

Lenders typically want your housing payment below 28% of gross monthly income:

Term	Monthly P&I	Add taxes/insurance (~$600)	Min income needed
15-year	$2,907	$3,507	$150,300/year
30-year	$2,155	$2,755	$118,100/year

The 15-year term requires roughly $32,000 more in household income to qualify. This is the primary reason most buyers choose 30 years — the 15-year payment simply does not fit their budget.

When the 15-year wins clearly

• You can afford the payment comfortably (less than 25% of gross income) and still max out retirement accounts
• You are over 45 and want to be mortgage-free before retirement
• You are risk-averse and prefer guaranteed interest savings over uncertain investment returns
• You are refinancing from a 30-year after paying for 5–10 years

When the 30-year is the better choice

• The 15-year payment would strain your budget — leaving no room for emergencies, retirement savings, or flexibility
• You are disciplined about investing the difference and expect to earn above 6.25% over 15+ years
• You have higher-rate debt (credit cards at 20%, student loans at 7%) that should be paid first
• You are buying in an expensive market and the 15-year payment is simply unaffordable
• You want lower payments now because you expect income to rise significantly

The middle path: 30-year with extra payments

Take the 30-year mortgage for its lower required payment, then pay extra when you can:

• 30-year at $2,155 + $752 extra = $2,907/month (same as the 15-year payment)
• Payoff time: ~15 years 8 months
• Total interest: ~$186,000

This gives you the flexibility of the 30-year (you can drop back to $2,155 if money is tight) with nearly the same savings as the 15-year. The only downside: the 30-year rate is 0.50% higher, so you pay about $13,000 more in interest than a true 15-year — a small price for the option value.

Use the Mortgage Payment Calculator to compare both terms with your specific loan amount and rates.