15 vs 30 Year Mortgage Calculator

15-Year vs 30-Year Mortgage Trade-Off

The two terms trade monthly affordability against total borrowing cost. A 15-year mortgage carries higher monthly payments but a much smaller interest bill, because the balance is repaid over half as many months and 15-year terms have historically tended to carry slightly lower interest rates than 30-year terms, though the gap varies by lender and over time. A 30-year mortgage spreads the same balance over more months, lowering each payment while increasing the cumulative interest. How large the difference is depends on the loan amount and the two rates you enter, and the calculator shows it for your own figures rather than relying on a fixed rule of thumb.

Worked Example

Take a 300,000 loan with a 15-year rate of 5.5% and a 30-year rate of 6.25%. The 15-year payment works out to about 2,451 a month and the 30-year to about 1,847, a gap of roughly 604 a month, or about 33% more than the 30-year payment. Over the full term, the 15-year loan costs about 141,000 in interest and the 30-year about 365,000, so the shorter term saves roughly 224,000 in total interest, close to 60% of the 30-year interest bill. In this example the 30-year interest comes to about 1.2 times the principal, while the 15-year comes to under half of it; the exact multiples move with the rates and amount you enter.

Equity Over Time

The shorter term also builds equity faster. In the worked example, the 15-year mortgage is fully repaid after 15 years, while the 30-year still has roughly 72% of its original balance outstanding at the same point, so the equity position differs considerably at the same number of years in. That difference only narrows if the lower 30-year payment is invested rather than spent.

What the Calculator Does Not Model

The model compares interest and monthly payments only. It does not account for the opportunity cost of the higher 15-year payment, the tax treatment of mortgage interest where it applies in your jurisdiction, refinancing that could change the rate later, or extra payments on a 30-year loan that shorten its effective term. Prepayment terms also vary by region and lender. A fuller comparison would weigh these alongside the interest figures shown here.

When Each Term Suits

The 15-year term suits borrowers whose budget comfortably absorbs the larger payment and who value lower lifetime interest and faster equity. The 30-year term suits those who want a lower required payment for flexibility, cashflow headroom, or investing the difference, accepting a higher total interest cost. A middle path is a 30-year loan with voluntary payments at a 15-year level when possible, which captures much of the interest saving while keeping the option to scale back.