15-Year vs 30-Year Mortgage: Total Cost Compared

The choice between a 15-year and a 30-year fixed-rate mortgage is not really a choice between two loans. It is a choice between two schedules for repaying the same debt, and the schedule changes almost everything that matters: the monthly payment, the interest rate you are offered, the speed at which you build equity, and the total amount you hand to the lender before the home is yours. This guide compares the two terms on a single worked example, using the standard amortization formula and the most recent Freddie Mac survey rates, so you can see exactly where the money goes and decide which trade-off fits your household.

What the loan term actually changes

The Consumer Financial Protection Bureau (CFPB) explains that a mortgage has three elements — loan type, loan term, and interest rate type — and that the term you choose affects three things at once: your monthly principal and interest payment, your interest rate, and how much interest you pay over the life of the loan. The CFPB's comparison is blunt. A shorter term such as 15 years means higher monthly payments, typically lower interest rates, and a lower total cost. A 30-year term reverses all three: lower monthly payments, typically higher interest rates, and a higher total cost.

Two details in the CFPB's guidance are worth underlining. First, the rate advantage of a shorter term can be meaningful — the bureau notes the interest rate on a shorter-term loan is usually lower, by as much as a full percentage point. Second, the size of that advantage is not fixed. It depends on the lender and the day, and the CFPB notes that rates vary among lenders especially for shorter terms, which is why it advises borrowers to compare official Loan Estimates for both terms before deciding rather than assuming a standard gap.

The rates used in this comparison

Every number in the worked example below is calculated from two published rates. Freddie Mac's Primary Mortgage Market Survey (PMMS), released November 5, 2026, put the average 30-year fixed-rate mortgage at 7.18 percent and the average 15-year fixed-rate mortgage at 6.57 percent — a gap of 0.61 percentage points. That November 5, 2026 release is the most recent PMMS published as of this writing.

Read those figures for what they are. The PMMS is a national average built from thousands of conventional, conforming home purchase loan applications submitted through Freddie Mac's Loan Product Advisor, for borrowers in the survey's criteria, which historically means a loan-to-value of 80 percent and strong credit. It is a benchmark, not a quote. The rate a lender offers you will differ with your credit score, down payment, loan size, and property, and it will differ between lenders on the same day. The example below is therefore labeled illustrative: the point is the arithmetic of the two terms, which you can rerun with any pair of rates you are actually quoted.

Side by side on a $400,000 loan

Take a loan amount of $400,000 — the amount borrowed, after any down payment — repaid with monthly principal and interest payments only. Taxes, homeowners insurance, mortgage insurance, and closing costs are excluded, because they do not depend on the term in the way interest does.

• <b>30-year fixed at 7.18 percent:</b> monthly principal and interest of $2,709.74; 360 payments; total interest of $575,506; total of all payments $975,506.
• <b>15-year fixed at 6.57 percent:</b> monthly principal and interest of $3,499.84; 180 payments; total interest of $229,971; total of all payments $629,971.

The differences are the whole story. The 15-year loan costs $790.10 more every month. In exchange, it saves $345,535 in interest over the life of the loan — the borrower pays back roughly 57 cents of interest for every dollar borrowed, against roughly $1.44 of interest per dollar borrowed on the 30-year schedule. Neither figure is a trick of rounding; both come from the same formula in the next section, and you can reproduce them with any loan calculator.

One persistent exaggeration is worth correcting here: the 15-year payment is not double the 30-year payment. On this example it is about 29 percent higher. Doubling the repayment speed does not double the payment, because a large share of the early 30-year payment is interest rather than principal repayment in the first place.

Why the gap is so large: term first, rate second

It is tempting to credit the lower 15-year rate for the savings. The arithmetic says otherwise; the shorter term does most of the work, and the rate gap adds a smaller bonus on top. Hold the rate constant at 7.18 percent for both terms and the 15-year loan would cost $3,635.69 a month with total interest of $254,424. Compared with the 30-year total interest of $575,506, shortening the term alone removes about $321,082 of interest. The additional 0.61-point rate advantage, from 7.18 down to 6.57 percent, removes a further $24,453 and trims the monthly payment by about $136.

The mechanism is amortization. Interest each month is charged on the balance still owed. A 15-year schedule attacks the balance from the first payment, so the base on which interest is charged shrinks quickly. A 30-year schedule keeps the balance high for years, and interest is charged on that high balance month after month. That is also why the CFPB points out that, early in a loan, most of each payment goes to interest: the balance is at its largest exactly when the schedule repays it slowest.

The formula behind every number in this guide

All of the figures above come from the standard fixed-rate amortization formula. For a loan of principal P, a monthly interest rate r (the annual rate divided by 12), and n monthly payments, the monthly payment M is:

M = P × r × (1 + r)^n ÷ ((1 + r)^n − 1)

For the 30-year example, P is $400,000, r is 0.0718 ÷ 12, and n is 360, which produces $2,709.74. Total interest is simply M × n − P. The remaining balance after any given month follows the same formula with the payments made so far substituted for n. If a lender's quote or a calculator gives you materially different results for the same inputs, one of the inputs is not what you think it is — most often the calculator has added taxes, insurance, or fees to the payment, or the rate entered is an annual percentage rate rather than the note rate.

How fast equity builds under each term

Equity from repayment — separate from any change in the home's market value — is just principal repaid. Here the two schedules diverge early and dramatically, again on the same $400,000 illustrative loan:

• <b>After 5 years:</b> the 30-year loan has repaid $22,758 of principal, leaving a balance of $377,242. The 15-year loan has repaid $92,739, leaving $307,261.
• <b>After 10 years:</b> the 30-year loan has repaid $55,311, leaving $344,689. The 15-year loan has repaid $221,427, leaving $178,573 — more than half the debt gone.
• <b>After 15 years:</b> the 15-year loan is finished. The 30-year borrower still owes $298,127, with 15 years of payments remaining.

This matters for more than peace of mind. A borrower who expects to sell or refinance within a decade keeps far more of each payment under the shorter schedule: after ten years, the 15-year borrower has converted about $166,000 more of payments into ownership than the 30-year borrower on the same loan. It also matters for risk. A household that needs to sell during a flat or falling market is less exposed when the balance has been falling quickly.

The other side of the ledger: the monthly payment

None of this makes the 15-year term automatically correct, because the $790.10 monthly difference is real money that has to come from somewhere every single month, including the months when income dips or expenses spike. The CFPB's framing cuts both ways: shorter terms generally save money overall but have higher monthly payments, and the higher payment is a requirement, not an aspiration. A missed payment damages credit and, in the extreme, puts the home at risk; a voluntary extra payment skipped in a hard month costs nothing.

The higher required payment also affects how much you can borrow. Lenders qualify you partly on the ratio of your monthly debts to your income, and the mortgage payment is usually the largest item in that ratio. Purely as arithmetic illustration: for a household with $8,333 of gross monthly income ($100,000 a year), the principal and interest alone on the example loans would absorb about 32.5 percent of gross income under the 30-year term and about 42.0 percent under the 15-year term, before property taxes and insurance are added to either. The same income can therefore support a materially smaller loan, or fail to qualify at all, on the shorter schedule. This is one reason the CFPB advises requesting Loan Estimates for both terms from the same lender on the same day: the comparison is only meaningful with your numbers in it.

Opportunity cost: what the $790 difference could do instead

The strongest argument for the 30-year term is not comfort; it is opportunity cost. A household that takes the 30-year loan and genuinely invests the $790.10 monthly difference is not standing still — it is building a liquid asset while its mortgage balance falls slowly. Liquidity has real value: savings outside the home can cover a job loss, a repair, or a business opportunity, while home equity generally cannot be spent without selling or borrowing against it.

An honest comparison has to keep going past year 15, though. At that point the 15-year borrower has no mortgage payment at all and can redirect the full $3,499.84 a month, while the 30-year borrower still owes $298,127 and must keep paying $2,709.74 a month for 15 more years. Comparing total interest paid against an investment balance at a single early date stacks the deck; the fair comparison is household net worth at the same date, counting the remaining mortgage balance as a negative. It also has to be said plainly that any investment return used in such a comparison is an assumption, not a fact: markets do not pay a fixed rate, the return is not guaranteed, and the discipline to invest the difference every month for 15 years is itself part of the strategy. The mortgage side of the comparison, by contrast, is contractual. The $345,535 interest saving on the example loan does not depend on market performance; it follows from the schedule and the rate.

Middle paths between the two terms

The choice is not binary, and for many households the best answer is a deliberate hybrid.

Take the 30-year loan and pay it on the 15-year schedule. On the example loan, paying $3,499.84 a month — the 15-year payment amount — against the 30-year loan at 7.18 percent clears the debt in 194 months, about 16 years and 2 months, with total interest of $275,567. That is roughly $299,939 less interest than the scheduled 30-year path, while keeping the contractual payment at $2,709.74 for any month when money is tight. The flexibility is not free: it costs about $45,596 more in interest than the true 15-year loan, which is the price of the higher 7.18 percent rate and the slightly longer payoff. Before relying on this strategy, confirm in writing that your loan has no prepayment penalty and that extra amounts are applied to principal.

Choose a term in between. The CFPB notes that loan terms are not limited to 15 and 30 years, and that you may be able to negotiate a different term, such as 20 years, with your lender. A 20-year schedule splits the difference in both payment and total interest.

Refinance later — with eyes open. Some borrowers take a 30-year loan planning to refinance into a shorter term if rates fall. That can work, but it is a hope, not a plan with a guaranteed outcome: future rates are unknown, refinancing carries its own closing costs, and qualifying again depends on your income, credit, and home value at that future date.

Who each term tends to fit

Patterns are not rules, but the arithmetic points in consistent directions. The 15-year term tends to fit borrowers with stable, well-covered income who would still keep a full emergency fund after the higher payment, borrowers in their peak earning years who want the mortgage gone before retirement income begins, and borrowers who know they spend what is available and value the forced discipline of a contractual schedule. The 30-year term tends to fit buyers stretching to qualify for the home they need, households with variable income who cannot commit to a high fixed obligation, borrowers whose cash reserves would be thin after closing, and disciplined savers who will actually invest or otherwise productively use the monthly difference rather than absorb it into spending.

Common misconceptions

"The 15-year payment is twice the 30-year payment." Not on any realistic rate pair. Because so much of the 30-year payment is interest, doubling the repayment speed raised the payment by about 29 percent in the worked example, not 100 percent.

"Paying extra on a 30-year loan is exactly the same as a 15-year loan." Close, but not identical. You keep the higher 30-year rate, and in the worked example that costs about $45,596 more in interest than the true 15-year schedule. What you buy with that difference is the right to fall back to the lower required payment.

"A shorter term is always the smarter choice." The interest saving is certain; your income over the next 15 years is not. A term that leaves no margin for job loss, illness, or an irregular income can turn a mathematically cheaper loan into a financial emergency.

"More interest paid means a bigger tax benefit, so the 30-year loan wins." Even where mortgage interest is deductible for a particular household, a deduction returns only a fraction of each interest dollar; paying a dollar of interest to recover part of it in tax is still paying the dollar. Households should check their own tax situation rather than treat the deduction as a reason to choose the costlier schedule.

Conclusion

On a $400,000 loan at the Freddie Mac survey rates released November 5, 2026 — 7.18 percent for 30 years, 6.57 percent for 15 years — the 15-year mortgage costs $790.10 more per month and $345,535 less in total interest, builds equity roughly four times as fast in the first decade, and ends 15 years sooner. The 30-year mortgage offers the lower required payment, easier qualification, and liquidity that a disciplined household can put to work. The right choice is the one whose required payment you can sustain in a bad year, not just a good one — and the most reliable way to decide is to run the formula above on Loan Estimates for both terms from the same lenders, on the same day, with your own income and reserves in view.

Frequently asked questions

Sources

Freddie Mac, Primary Mortgage Market Survey, released November 5, 2026: average 30-year fixed-rate mortgage 7.18 percent; average 15-year fixed-rate mortgage 6.57 percent; survey methodology based on conventional, conforming home purchase loan applications via Loan Product Advisor. https://www.freddiemac.com/pmms

Consumer Financial Protection Bureau, "Understand the different kinds of loans available" (loan term affects monthly principal and interest payment, interest rate, and total interest over the life of the loan; shorter terms have higher monthly payments, typically lower interest rates, and lower total cost; rate on a shorter term usually lower by as much as a full percentage point; rates vary among lenders especially for shorter terms). https://www.consumerfinance.gov/owning-a-home/explore/understand-the-different-kinds-of-loans-available/

Consumer Financial Protection Bureau, "Explore interest rates" (shorter loan term generally offered a lower rate because there is less risk to the lender). https://www.consumerfinance.gov/owning-a-home/explore-rates/

Consumer Financial Protection Bureau, "Shopping for a Mortgage" (longer loan term costs more over the life of the loan with typically lower monthly payments; other terms such as 20 years may be negotiable with a lender). https://www.consumerfinance.gov/consumer-tools/mortgages/shopping-for-a-mortgage/

All payment, balance, and total interest figures in this guide are the author's calculations from the standard amortization formula stated in the article, applied to the Freddie Mac survey rates above; they are illustrative and exclude taxes, insurance, mortgage insurance, and closing costs.