15-Year vs 30-Year Mortgage: Payment and Interest Compared

The short answer

A 15-year mortgage has a higher monthly payment but costs far less interest. On a $320,000 loan, using rates close to the October 2026 averages, a 30-year loan at 7.4% costs about $2,216 a month in principal and interest, and a 15-year loan at 6.7% about $2,823. The 15-year loan costs $607 more each month but saves roughly $289,600 in interest. You can test your own numbers with the Mortgage Calculator.

Which is better depends less on the maths than on whether the higher payment fits your budget with room to spare.

The rates used in this comparison

Freddie Mac's Primary Mortgage Market Survey for the week of 15 October 2026 reported average fixed rates of 7.40% for 30-year loans and 6.71% for 15-year loans. Your own quote will depend on your credit, deposit, loan size and lender, so treat these as illustrations. The examples below use 7.4% and 6.7%, because the calculator's rate slider moves in steps of 0.1%.

Side-by-side comparison

Home price $400,000, down payment $80,000 (20%), loan $320,000:

| 30-year at 7.4%	15-year at 6.7%
Monthly principal and interest	$2,216	$2,823
Number of payments	360	180
Total paid	$797,760	$508,140
Total interest	$477,760	$188,140
Loan balance after 5 years	about $302,474	about $246,390
Loan balance after 10 years	about $277,129	about $143,584

The totals come from multiplying the rounded monthly payment by the number of payments. Balances were calculated with a standard month-by-month amortisation.

Why the 15-year loan builds equity so much faster

In the very first month of the 30-year loan, about $1,973 of the $2,216 payment is interest and only about $243 reduces the balance. On the 15-year loan, the first payment's interest is about $1,787 and about $1,036 goes to principal. That gap is why, after five years, the 15-year borrower owes about $56,000 less.

How to compare the two in the calculator

Open the Mortgage Calculator.

Set Home price to your purchase price and Down payment to your deposit. If the deposit is under 20%, the calculator adds an estimated PMI amount and shows a warning.

Set Rate (annual) to the 30-year rate you have been quoted and Loan term to 30.

Note the Principal + Interest and Total interest figures.

Change the rate to your 15-year quote and the term to 15, and note the same two figures.

The Monthly payment figure is higher than principal and interest because it also adds the property tax you enter and a fixed insurance estimate of $100 a month. Those costs are roughly the same whichever term you choose, so compare the principal and interest figures when choosing a term.

Who a 15-year mortgage suits

• Borrowers whose budget handles the higher payment easily. A useful test is whether you could still afford the payment if your income dropped for a few months.
• People who want to be debt-free by a set date, such as before retirement or before children start college.
• Those who value a guaranteed return. Every dollar of interest avoided is a certain saving, while investment returns are not guaranteed.

Who a 30-year mortgage suits

• First-time buyers stretching to buy. The lower required payment leaves more margin for repairs, job changes and emergencies.
• Households with irregular income. You can pay extra in good months without being required to.
• People who would otherwise skip retirement contributions, especially where an employer matches contributions.
• Buyers who might not stay long. If you sell within a few years, the total-interest difference over 15 or 30 years matters less than the payment you can manage now.

The middle path: a 30-year loan paid faster

If your loan has no prepayment penalty, you can take a 30-year mortgage and pay extra when you can. In our example, paying $2,823 a month on the 30-year loan at 7.4% clears it in about 196 months, roughly 16 years and 4 months, with about $231,361 in total interest.

That is better than the standard 30-year schedule, but still about $43,000 more interest than the 15-year loan, because the rate is higher. You are paying for flexibility. Before relying on this plan, confirm with your lender how extra payments are applied: they should reduce principal, not simply prepay next month's installment.

Questions to ask before choosing

What is the gap between the two rates you have been quoted? The bigger the gap, the stronger the case for 15 years.

Will you still have an emergency fund after the down payment and closing costs? A smaller monthly payment is no help if you have no savings buffer.

Are you carrying higher-interest debt? Paying off a credit card at 20% or more usually beats paying a mortgage down faster.

How long do you expect to keep the home?

Is a 20-year term available? Some lenders offer 20-year loans, which sit between the two.

Common mistakes

• Comparing payments at the same rate. 15-year loans are usually quoted at a lower rate. At 7.4% for both terms, the 15-year payment would be $2,948, not $2,823.
• Ignoring taxes, insurance and PMI. They can add hundreds of dollars a month to either option.
• Choosing the shorter term and then borrowing elsewhere. If the higher payment pushes you onto credit cards, the interest saving disappears quickly.

Summary

On a $320,000 loan, the 15-year option costs about $607 more each month but saves roughly $290,000 in interest and builds equity much faster. The 30-year option keeps the required payment lower and leaves room for the unexpected. Run both terms with your own quotes in the calculator, and pick the payment you can keep making comfortably. For more on how payments, PMI and amortisation work, see the full mortgage calculator guide. This guide explains the general maths of mortgage terms and is not financial advice.