Educational guide
15-year vs 30-year mortgages: what you actually trade
Same loan amount, same rate, two terms. Compare monthly payment, total interest, and how much principal you clear in the first five years.
Last reviewed: 2026-10-10. Estimates only — not financial, tax, or legal advice.
A 15-year mortgage and a 30-year mortgage can start from the same house price, the same down payment, and the same interest rate. They still produce very different monthly bills and very different lifetime interest. The trade is not mysterious once you hold every input fixed except term. This guide does exactly that with the same $320,000 principal used in our other mortgage write-ups: a $400,000 home, 20% down, and a 6.5% fixed note rate.
The math is the ordinary fully amortizing payment formula. You can check every total below with a calculator. The live mortgage calculator uses the same formula; change only the term to reproduce the two columns.
Hold the loan constant, change only the term
Principal P is $320,000. The monthly rate r is 0.065 / 12. The 30-year term is 360 months. The 15-year term is 180 months. Monthly principal and interest is:
M = P × [ r (1 + r)n ] / [ (1 + r)n − 1 ]
Plug in n = 360 and you get about $2,022.62 per month. Plug in n = 180 and you get about $2,787.54 per month. The shorter loan costs about $765 more each month in P&I alone. That is the cash-flow price of finishing sooner.
| Item | 30-year | 15-year |
|---|---|---|
| Loan principal | $320,000 | $320,000 |
| Note rate | 6.5% | 6.5% |
| Monthly P&I | $2,022.62 | $2,787.54 |
| Scheduled payments | 360 | 180 |
| Total P&I paid | $728,142 | $501,758 |
| Total interest | $408,142 | $181,758 |
Interest on the 30-year loan is about $408,142. Interest on the 15-year loan is about $181,758. The shorter term saves roughly $226,400 of interest if you keep the loan to maturity, never refinance, and never pay extra. That is the lifetime-cost side of the trade.
The first five years tell a different story than the payment
People often stare only at the monthly number. The amortization split in the early years is just as important. After five years of on-time payments and no extras:
- 30-year loan: about $20,445 of principal is gone. Balance ≈ $299,555. Interest paid in those five years ≈ $100,912.
- 15-year loan: about $74,505 of principal is gone. Balance ≈ $245,495. Interest paid in those five years ≈ $92,747.
The 15-year borrower paid higher monthly P&I, cleared far more principal, and still paid less interest over the same five-year window. Equity builds faster because more of each payment is principal from day one. That is not a marketing claim. It is the arithmetic of a shorter n in the same formula.
What the trade is really asking
A 15-year loan asks whether you can sustain the higher payment through job changes, repairs, and ordinary life. A 30-year loan asks whether the lower payment is worth more than two hundred thousand dollars of extra interest if you hold the mortgage for decades. Neither question has a universal answer. Cash-flow flexibility and total interest pull in opposite directions.
Two practical notes follow from the table. First, comparing terms only works when rate and principal match. Lenders sometimes quote a slightly lower rate on 15-year products; if that happens, re-run both sides with the real quotes rather than this single-rate illustration. Second, many borrowers take a 30-year loan and send extra principal when they can. That hybrid path can land between the two columns. Our separate guide on extra principal payments walks that case.
Same payment budget, different principal
Flip the question. Suppose the borrower can afford about $2,022.62 a month in P&I — the 30-year payment on $320,000 — and asks how large a 15-year loan that payment would support at the same 6.5% rate. Rearranging the amortizing formula for principal gives roughly $232,000 of 15-year principal (before rounding). In other words, the payment that carries $320,000 over 30 years carries only about 72% as much principal over 15 years at this rate. Term is a budget tool as much as a cost tool.
That view matters when someone says “just take the 15-year.” The house price and down payment still have to fit the higher payment, or the purchase price has to come down. The calculator is the right place to test those knobs; this guide freezes them so the pure term trade stays visible.
Assumptions and limitations
- Fixed rate, fully amortizing, monthly payments. No ARM resets, interest-only periods, or balloons.
- Same 6.5% rate on both terms. Real offers may price 15-year and 30-year loans differently.
- No PMI, HOA, points, closing costs, or refinance. Those change the all-in cost without changing the P&I formula.
- No extra principal in this comparison. Extras shrink the 30-year interest column without converting the loan into a true 15-year contract.
- Property tax and insurance are omitted on purpose so the term trade is visible. They do not amortize with the loan.
Sources and methodology
Payment and interest totals come from the standard amortizing formula implemented in our open calcAmortizedLoan helper — the same code path as the on-site mortgage calculator. Five-year principal balances are produced by iterating that schedule month by month. For consumer-facing discussion of loan estimates and closing disclosures, see materials from the Consumer Financial Protection Bureau. This page is an educational estimate, not a lender quote or advice to choose a term.