Lower payments or less total interest?
The choice between a 15-year and 30-year mortgage comes down to a trade-off between monthly cash flow and total cost. A 15-year mortgage has higher monthly payments but saves you tens of thousands (or hundreds of thousands) in interest. A 30-year mortgage gives you breathing room each month but costs significantly more over time.
On a $300,000 loan, the difference in total interest is staggering: approximately $114,000 for a 15-year vs $383,000 for a 30-year — that's $269,000 more in interest for the 30-year option. However, the 30-year's lower payment frees up ~$500/month that could be invested elsewhere.
Best For
People with high income, low other debts, who want to minimize total interest paid and own their home outright as quickly as possible.
Best For
People who want lower monthly payments, need financial flexibility, or plan to invest the payment difference in higher-returning assets.
| Factor | 15-Year Mortgage | 30-Year Mortgage |
|---|---|---|
| Monthly Payment ($300K loan) | ~$2,300/month at 6.0% | ~$1,800/month at 6.5% |
| Total Interest Paid | ~$114,000 | ~$383,000 |
| Interest Rate | Typically 0.5–0.75% lower | Typically 0.5–0.75% higher |
| Total Cost of Loan | ~$414,000 | ~$683,000 |
| Equity at Year 5 | ~$85,000 | ~$30,000 |
| Monthly Savings | None (higher payment) | ~$500/month to invest elsewhere |
If you can comfortably afford the higher 15-year payment (without sacrificing retirement savings or emergency fund), the 15-year mortgage is the mathematically superior choice — you'll save $200K+ in interest. However, if the higher payment would strain your budget, the 30-year is the safer choice. A smart middle ground: take a 30-year mortgage but make extra payments as if it were a 15-year. This gives you flexibility to reduce payments if needed while still paying off the loan early.