15-Year vs 30-Year Mortgage: Which One Costs Less?

The term of your mortgage, the number of years you have to repay it, is one of the biggest choices you make when you buy a home or refinance. Most people pick the 30-year loan because the monthly payment is lower. Some pick the 15-year loan because they want to be debt-free sooner and pay much less interest. Both choices are reasonable. This guide shows what each one really costs.

The same $300,000 loan, two terms

We use rates from Freddie Mac's Primary Mortgage Market Survey for the week of October 8, 2026: 7.40% for a 30-year fixed loan and 6.73% for a 15-year fixed loan. These are national averages. Your own rate depends on your credit, your down payment and the lender.

Read that last row again. After five years, the 15-year borrower owes about $52,500 less. In a 30-year loan the early payments are mostly interest, so the balance falls slowly.

Why the 30-year loan feels so slow at first

Each month, the lender charges interest on what you still owe. Only the rest of your payment reduces the loan. On the 30-year loan above, your first payment is $2,077, and $1,850 of it is interest. Only $227 pays down the loan. On the 15-year loan, the first payment is $2,651, and $1,683 is interest, so $969 goes to the loan, more than four times as much.

A shorter term means fewer months for the lender to charge interest, and a lower rate. Both help, and together they save about $270,500 in this example.

What the 15-year loan really asks of you

The extra $574 a month is not small. Before you choose a 15-year loan, check three things:

• Can you pay it in a bad month? A job loss or a big repair does not change the bill. A payment that is tight in a good month is dangerous.
• Will you still save? A high payment can squeeze out retirement saving and an emergency fund. The interest you avoid is a real benefit, but not if it leaves you with no cash.
• Will you qualify? Lenders compare your debts with your income. A bigger payment raises your debt ratio, so the price of the home you can buy may be lower. Fannie Mae's Selling Guide, for example, sets a maximum total debt ratio of 36% for manually underwritten loans, and up to 50% for loans run through its automated system.

The middle path: a 30-year loan with extra payments

You do not have to choose between a low payment and a short loan. You can take the 30-year loan and pay extra when you can. The extra money goes to principal, so the loan ends sooner and the interest falls.

• Pay $200 extra a month: the 30-year loan ends in 22 years and 9 months, and the total interest falls to about $319,900. That saves about $127,900 against the plain 30-year loan.
• Pay the 15-year amount ($2,651) on the 30-year loan: it ends in about 16 years and 3 months, with interest of about $216,000.

Compare the second line with the real 15-year loan: $216,000 of interest against $177,300. The 15-year loan is still cheaper, because its rate is lower. The difference, about $38,800, is the price of keeping the freedom to pay less in a hard month. For some people that freedom is worth it.

You can test any extra amount with the mortgage payoff calculator. Enter your balance, rate and an extra monthly payment, and it shows the new payoff date and the interest you avoid.

When a 15-year loan makes sense

• Your income is steady and you have a full emergency fund.
• The payment still leaves room to save for retirement.
• You want to be mortgage-free before a big goal, such as retirement or a child starting college.
• You are refinancing and can lower your rate by a good amount at the same time.

When a 30-year loan makes sense

• You want a lower, safer required payment, because your income changes from month to month.
• You would use the extra $574 a month to pay off debt that costs more than your mortgage, such as credit cards.
• You want to buy a home that needs the longer term to fit your debt ratio.
• You plan to invest the difference. Be careful here. Returns are not guaranteed, and a paid-down loan is a sure saving of its interest rate.

What about the rate difference?

The 15-year rate is lower because the lender gets its money back sooner, so it takes less risk. On October 8, 2026, the gap was 0.67 percentage points. The gap changes every week. When you shop, ask for quotes on both terms on the same day, with the same points and fees, and compare the full Loan Estimate for each.

The Consumer Financial Protection Bureau advises you to request Loan Estimates from several lenders and compare them, because that is the best way to tell whether an offer is competitive.

A simple way to decide

1. Work out the payment on both loans with your own numbers.
2. Check that the 15-year payment is below what you can pay in a hard month.
3. Check that you still save for retirement and keep an emergency fund after paying it.
4. If the 15-year loan passes, it is the cheaper loan. If it does not, take the 30-year loan and add extra payments when you can.

Frequently asked questions

Is a 15-year mortgage always cheaper?

In total interest, yes, almost always, because the term is shorter and the rate is lower. In monthly cost it is more expensive. Whether it is better depends on what you do with the monthly difference and how safe the bigger payment is for you.

Can I switch from a 30-year to a 15-year loan later?

Yes, by refinancing. You pay closing costs, which the Federal Reserve's refinancing guide says can be 3% to 6% of the amount you owe, so compare those costs with the interest you would save. You can also keep the 30-year loan and pay the 15-year amount on your own.

Does paying extra shorten a 30-year mortgage?

Yes. Extra money should go to principal. Ask your servicer to apply it that way, and check that your loan has no prepayment penalty.

Should I take a 15-year loan if I can only just afford it?

Usually not. A required payment you can only just make adds risk. The 30-year loan with extra payments gives you the same speed in good months and room in bad ones.

Which loan builds equity faster?

The 15-year loan, by a lot. In the example, the balance after five years is about $231,100 against $283,600. Home prices can also move your equity, but the loan balance is the part you control.

The bottom line

The 15-year loan is the cheaper loan. The 30-year loan is the safer promise. If the shorter loan fits comfortably with your savings and your debt ratio, it can save a very large sum. If it does not, the 30-year loan with extra payments is a strong plan too.

Sources

• Primary Mortgage Market Survey (week of October 8, 2026), Freddie Mac
• Selling Guide B3-6-02: Debt-to-Income Ratios, Fannie Mae
• A Consumer's Guide to Mortgage Refinancings, Federal Reserve Board
• Buying a house: loan options and the Loan Estimate, Consumer Financial Protection Bureau

All payments, interest totals and payoff times above are calculated from the formulas used by the calculators on this site, with no taxes, insurance or fees. Your own rate and terms will differ. Last reviewed October 12, 2026.