How to Decide Between a 15-Year and 30-Year Fixed Mortgage

Compare 15-year and 30-year mortgages side-by-side: rates, monthly costs, total interest, and which fits your income and goals.

  1. Understand the rate and payment difference. Lenders offer lower interest rates on 15-year mortgages than 30-year ones — typically 0.3–0.5 percentage points lower as of 2026. Your monthly payment will be roughly 60% higher on a 15-year loan for the same loan amount. Example: a $300,000 loan at 6% costs about $1,799/month for 30 years or $2,666/month for 15 years. The lower rate and shorter term both reduce what you owe in interest.
  2. Calculate the total interest you'll pay. Multiply your monthly payment by the number of months, then subtract the principal. Over 30 years at 6%, that $300,000 loan costs about $647,515 in total payments (interest: $347,515). Over 15 years at 5.5%, it costs about $479,733 in total payments (interest: $179,733). The difference: you save roughly $168,000 in interest by going with 15 years — but only if you can afford the higher payment.
  3. Check whether your budget can handle the higher payment. A rule of thumb: your total monthly debt payments (mortgage, car loans, credit cards) should not exceed 43% of your gross monthly income. If the 15-year payment pushes you above that, or leaves you without an emergency fund or retirement savings, the 30-year option is safer. Feeling stretched is a warning sign; it means one job loss or repair bill could derail you.
  4. Consider your other financial priorities. If you have high-interest debt (credit cards above 8%), no emergency fund, or aren't saving for retirement, the 30-year mortgage frees up cash to handle those first. A 15-year mortgage makes sense if you have stable income, low debt outside the mortgage, a full emergency fund, and are already on track with retirement savings. Don't sacrifice financial resilience for a lower interest bill.
  5. Factor in the flexibility trade-off. With a 30-year mortgage, you own the home free and clear at age 95 instead of 80, but you have lower payments and more breathing room each month. With a 15-year mortgage, you build equity twice as fast and own the home sooner, but you have less money for emergencies or opportunities. There is no wrong choice — it depends on whether you'd rather pay less per month or pay off the house faster.
  6. Don't use the 15-year mortgage as an investment hack. Sometimes people argue a 30-year mortgage is better because you can invest the difference in payments and earn higher returns. This logic is seductive but risky: it assumes you *will* invest that money (most people don't), it requires you to stomach market volatility, and it ignores that paying off a home is a guaranteed return via interest saved. If you're not a disciplined investor, the simplicity and certainty of a 15-year mortgage often wins.