15-year vs 30-year mortgage: what the shorter loan costs and saves

A $400,000 purchase with 20 percent down leaves a $320,000 mortgage, and the loan length changes nearly everything about that loan except the house itself. At Freddie Mac weekly averages checked October 24, 2026 (7.32 percent for 30 years and 6.68 percent for 15 years, both from October 22), principal and interest run $2,198.18 a month over 30 years and $2,819.31 over 15 years. The $621.13 monthly gap buys $283,869 less lifetime interest and equity years sooner, but only pays off if the higher payment still leaves room for savings, repairs, and everything else. This is a fictional worked example, and neither length is better for everyone.

How big is the monthly payment gap?

The gap is $621.13 a month, or $7,453.56 a year, on the identical $320,000 balance: $2,198.18 of principal and interest for the 30-year loan against $2,819.31 for the 15-year loan. Both figures exclude property tax, insurance, and any HOA dues, which land on top of either loan, so add those before comparing either payment with take-home pay. The mortgage calculator adds tax and insurance to the same payment math.

How much interest does each loan cost over its full life?

The 30-year loan charges $471,344 in interest, about 147 percent of the amount borrowed, because a higher rate compounds over twice as many years on a balance that falls slowly. The 15-year loan charges $187,475. The lifetime difference is $283,869, and it comes from a lower rate charged for half as many years on a balance that shrinks much faster. Our amortization explainer shows why early payments are mostly interest and when principal takes over.

How much faster does the 15-year loan build equity?

Hold the home value flat at $400,000 so the comparison isolates the loan paydown. Equity then starts at the $80,000 down payment and grows as principal is repaid:

After five years the 15-year borrower is $55,928 ahead, and after ten years the lead grows to $133,160: $256,528 of a $400,000 home against $123,368. The shorter loan is a forced equity schedule, which matters most if a move, refinance, or appraisal arrives earlier than planned.

What if you take the 30-year loan but pay it like a 15-year loan?

This is the middle route: keep the 30-year loan at 7.32 percent but pay the 15-year amount by adding $621.13 extra each month. The loan ends after 194 months, or 16 years and 2 months, with $226,506 of total interest, saving $244,838 against the plain 30-year schedule. The price of flexibility is the higher rate, since the middle route costs $39,031 more interest than the true 15-year loan, but the required payment stays $2,198.18, so a tight month lets you fall back to the minimum instead of missing a $2,819 bill. Direct the extra at principal and confirm the servicer applies it that way.

Who should think twice about the higher payment?

Anyone whose budget only works if nothing goes wrong. The $621.13 gap has to come from somewhere every month for 15 years, through job changes, repairs, and rate moves on other debts. Before choosing the shorter loan, check that your emergency fund covers the higher payment for several months, and the emergency fund calculator sizes that target from your actual spending. If spare cash could instead clear much higher rate credit card balances, work that payoff order first with the snowball versus avalanche comparison, because costlier debt usually beats cheaper mortgage interest.

What upfront costs sit outside the monthly comparison?

The payment gap is not the whole price of choosing. Both loans in this example start from the same $80,000 down payment, but the cash due at closing goes beyond it: lender charges, title and recording fees, prepaid tax and insurance, and optional points that buy the rate down. Points trade cash today for a lower rate over the years you keep the loan, so they only pay off if you stay past their own break-even point. Ask the lender to quote each loan length with the same points so the comparison stays honest.

A smaller down payment adds another layer. Putting less than 20 percent down usually means mortgage insurance on top of principal and interest until the loan balance falls far enough to remove it, which raises the early years of either loan. Homeowner association dues, where they apply, land on top of both loans equally. None of these appear in the payment and interest figures above, so add them before judging either payment. If the upfront cash is the binding constraint, the savings goal calculator sizes the monthly saving needed to reach it by a target date.

How do you compare the two loans with your own numbers?

These figures rest on weekly national averages that move: 7.32 percent for 30 years and 6.68 percent for 15 years on October 22, 2026, against 7.40 and 6.73 percent two weeks earlier, all from the Freddie Mac Primary Mortgage Market Survey. Re-run the comparison with your quoted rate in the mortgage calculator. Whichever length you choose, Nethaven tracks the mortgage as a loan account with its balance and payoff progress visible next to net worth (see debt and goals), so the equity curve above becomes a line you watch each month.

Rates are Freddie Mac PMMS weekly averages checked October 24, 2026. All households, balances, and bills in the worked example are fictional.