30-Year vs 15-Year Mortgage: Which Saves More?

The 15-Year Saves $332,820 — But That's Not the Whole Story

The math is simple: a 15-year mortgage saves you $332,820 in interest on a $400,000 loan. But the monthly payment is $775 higher ($3,399 vs $2,624). That gap is what matters when deciding.

Who Should Get a 15-Year Mortgage

The 15-year is the clear winner if:

• The higher monthly payment is comfortably within your budget (rule of thumb: housing costs under 28% of gross income)
• You want to be debt-free faster and build equity rapidly
• You're in your 40s–50s and want the mortgage paid off before retirement
• You have a stable, predictable income
• You have an adequate emergency fund (6+ months expenses)

Who Should Get a 30-Year Mortgage

The 30-year makes more sense if:

• The monthly payment difference would stress your budget
• You have high-interest debt (credit cards, personal loans) — pay those first
• You're self-employed or have variable income
• You plan to invest the difference — historically, stock market returns have outpaced 6-7% mortgage rates over long periods
• You're young with a long career ahead and expect income to grow

The "Invest the Difference" Argument

The most common argument for 30-year: take the $775/month you'd save vs the 15-year, invest it in index funds, and come out ahead. Here's the math:

The Hybrid Strategy: 30-Year Loan, Pay Like 15

Get the 30-year loan for flexibility, but make 15-year-equivalent payments when you can. You'll pay off early and save most of the interest — but if income drops, you can fall back to the minimum. The catch: you lose the 0.7% rate advantage of the 15-year.

Bottom Line