15 vs 30-Year Mortgage: A Real-Numbers Comparison

15-year vs 30-year, side by side

A $360,000 loan — roughly a $400,000 home with 10% down, the median first-time-buyer down payment — at this week's survey averages. Principal and interest only.

Rates: Freddie Mac PMMS, week of July 23, 2026. Principal and interest only — property tax, insurance, and any mortgage insurance apply on top of both columns and are identical between them. “Principal paid” is amortization only and excludes any change in the home's value. We pin the worked examples to this survey week so that every figure across our guides and calculators is computed from one rate; the following section shows where the survey has moved since.

The same comparison at three loan sizes

Total interest: 30-year $323,656 / $466,063 / $647,313; 15-year $128,866 / $185,566 / $257,732 for the three loan sizes respectively. All at the week of July 23, 2026 averages.

Notice that the interest saving scales almost linearly with loan size while the monthly premium does too — the shape of the decision does not change with the size of the loan. What changes is how much of your budget that premium eats. Run it on your own loan with the 15 vs 30-year mortgage calculator.

Why the 15-year rate is lower — and by how much

A shorter term almost always carries a lower rate, for a simple reason: the lender's money is exposed for half as long, so it demands less compensation for the risk that rates, inflation, or your circumstances change. That gap is the whole reason the 15-year is more than just “the 30-year paid faster.”

Freddie Mac PMMS weekly releases, July 2026. The long-run average is computed from the full published series — FRED's MORTGAGE30US and MORTGAGE15US — across every week both have existed.

Today's 0.62-point gap is close to normal. Across all 1,823 weeks in which Freddie Mac has published both series — August 1991, when the 15-year survey began, through July 2026 — the spread has averaged 0.57 percentage points. It has been as narrow as 0.20 points (December 2008, in the depths of the financial crisis) and as wide as 1.00 point (March 2014). Over the last decade it has run slightly wider than its own history, averaging 0.67 points since 2016.

The practical implication: the gap is meaningful but modest, and it is currently a little below the recent decade's norm. It is not so large that the 15-year is obviously correct, and not so small that the shorter term is only about discipline. Before you commit, check the current survey — a wider gap strengthens the 15-year case, a narrower one weakens it.

The equity difference is front-loaded

This is the part the total-interest headline hides. On a 30-year loan the early payments are overwhelmingly interest — after five years on our $360,000 example, the borrower has retired just $22,706 of principal out of about $137,700 paid. The 15-year borrower, five years in, has retired $86,628.

By year ten it is $203,239 against $54,210 — the 15-year borrower is more than halfway to owning the house outright while the 30-year borrower still owes 85% of the original loan. That matters for more than pride: it is what determines whether you can refinance without mortgage insurance, borrow against the house, or sell without owing more than the sale nets after costs.

See the full schedule for either term with our amortization calculator, and what the resulting equity is worth with the home equity calculator.

Choose 15 if / choose 30 if

Check what each payment does to your qualifying ratios with the DTI calculator and the affordability calculator before you decide. It is common to find the 15-year term reduces the house you can buy.

The “invest the difference” argument, fairly

The standard case for the 30-year is that you take the lower payment, invest the $736 difference, and come out ahead because markets return more than 5.96%. It is a real argument and it deserves a real answer rather than a dismissal.

Start with what you are comparing. Choosing the 15-year earns a certain, risk-free, tax-free 5.96% — it is not a projected return, it is interest you simply never pay. To win, the invested difference has to beat that after tax and after accounting for the risk you took to get it. Published long-run series put US equity returns at roughly 10% a year nominally since 1928, which clears the bar comfortably on average.

But three things stand between that average and your outcome. First, the average conceals decade-long stretches well below it, and your fifteen years are a single sample, not the average. Second, taxes and fees take a slice that the mortgage saving does not. Third — and this is the one that actually decides it — the strategy requires you to invest the difference every single month for fifteen years, through job changes and car repairs and a recession. Most people who plan to do this do not.

The third option: a 30-year you prepay

You can take the 30-year and pay it like a 15-year, keeping the lower required payment as a safety net. If money gets tight, you stop prepaying instead of missing a payment. That optionality is genuinely valuable and it is the right answer for a lot of households.

The cost of that flexibility is the rate. You pay 6.58% rather than 5.96% on every dollar of outstanding balance for as long as you hold the loan, so a 30-year retired in fifteen years costs measurably more in interest than a true 15-year would have. You are buying an insurance policy, and the premium is the 0.62-point spread.

The lowest-friction version is biweekly payments, which produce one extra monthly payment a year almost invisibly — model it with the biweekly payment calculator. For a target payoff date, the early mortgage payoff calculator works backwards to the extra payment required. Already have a loan and wondering whether to refinance into a shorter term? Start with is refinancing worth it.