15-Year Fixed vs 30-Year Fixed
A 15-year mortgage cuts the total interest you pay roughly in half — but the monthly payment is ~40–50% higher than a 30-year on the same loan amount. Here is the comparison and the trade-offs that actually matter.
| Factor | 15-Year Fixed | 30-Year Fixed |
|---|---|---|
| Typical interest rate vs 30-year | ~0.5–0.75% lower | Baseline |
| Monthly payment ($400K @ 7%) | $3,594 | $2,661 |
| Total interest ($400K @ 7%) | ~$247K | ~$558K |
| Equity build (year 5) | ~30% of principal | ~10% of principal |
| Flexibility on payment | Lower — higher fixed obligation | Higher — can pay extra voluntarily |
| Opportunity cost | Higher — less cash for investing | Lower — extra cash for retirement/etc. |
Choose 15-Year Fixed when…
You can comfortably afford the higher payment without sacrificing 401(k) matching or emergency fund, you want to be mortgage-free in 15 years, and you do not expect to move within the next decade.
Choose 30-Year Fixed when…
You want lower required payments to leave room for investing (especially when your tax-advantaged retirement accounts return more than your mortgage rate), or you might move within 5–10 years.
Run the numbers for your situation
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Open the calculator →Frequently asked questions
Is a 30-year mortgage with extra payments equivalent to a 15-year?
Mathematically close but not identical. A 30-year with $933/month extra payments on a $400K loan at 7% pays off in ~15 years. But you give up the ~0.5–0.75% lower interest rate that 15-year products offer. Net difference: 30-year + extra ends up costing about $30–60K more than a true 15-year over the life of the loan.
Why do banks offer lower rates on 15-year mortgages?
Shorter loans are less risky for the lender — less interest-rate exposure, less default risk over fewer years, and the principal returns faster so the bank can re-lend it. The lower rate is the lender passing some of that risk reduction to you.
When does refinancing 30 → 15 make sense?
When current rates are at least 0.5% below your existing rate AND you can comfortably afford the new higher payment AND you plan to stay in the home long enough to recoup closing costs (typically 24–36 months).