15 vs 30-year mortgage: payments, interest and equity compared

A 15-year mortgage costs more each month but far less overall. On a $350,000 loan, a 15-year at 6.68% runs about $3,084 a month versus $2,404 for a 30-year at 7.32%. That's $679 more a month, but you'd save about $310,000 in interest. Compare terms with your own numbers in our mortgage calculator.

Below are the side-by-side numbers, how fast each builds equity, and when each term tends to make sense.

Payments and total interest

Rates are the Freddie Mac averages for the week of October 22, 2026: 6.68% for a 15-year fixed and 7.32% for a 30-year fixed. Figures cover principal and interest only. Property tax, insurance and any PMI would be the same with either term.

	15-year at 6.68%	30-year at 7.32%
Loan amount	$350,000	$350,000
Monthly payment	$3,083.62	$2,404.26
Number of payments	180	360
Total interest	$205,051	$515,533
Total paid	$555,051	$865,533

The 15-year loan costs about $310,482 less in interest. Its total interest is roughly 40% of the 30-year's.

Two things drive that gap. First, the rate is lower, 6.68% versus 7.32%. Second, you pay interest for half as long. The second effect is the bigger one.

You can check current averages at Freddie Mac's PMMS page.

Equity after 5 and 10 years

Equity here means how much of the original loan you've paid off. It doesn't include any change in the home's value.

After	15-year: balance	15-year: equity built	30-year: balance	30-year: equity built
5 years	$269,391	$80,609	$330,563	$19,437
10 years	$156,922	$193,078	$302,566	$47,434
15 years	$0	$350,000	$262,241	$87,759

After five years, the 15-year borrower has paid off about four times as much principal: $80,609 versus $19,437. After 10 years, it's $193,078 versus $47,434.

That gap matters if you sell. More equity means more cash from the sale and less risk of owing more than the home is worth if prices fall.

Here's another way to see it. In the first five years, you'd pay about $144,256 in total on the 30-year loan. About $124,818 of that is interest. On the 15-year, you'd pay about $185,017, and $104,408 is interest. You pay more each month, but less of it goes to the lender.

Where your first payment goes

The first-month split shows why equity builds so differently.

First payment	15-year at 6.68%	30-year at 7.32%
Interest	$1,948.33	$2,135.00
Principal	$1,135.28	$269.26
Year 1 interest	about $22,955	about $25,509
Year 1 principal	about $14,048	about $3,342

On the 30-year loan, about 89% of the first payment is interest. On the 15-year, it's about 63%. In year one alone, the 15-year borrower pays down about four times as much principal while paying less interest.

The middle path: a 30-year loan paid like a 15

You can take a 30-year loan and pay extra each month. If you pay $3,083.62 (the 15-year payment) on the 30-year loan at 7.32%:

• You'd pay it off in about 194 months, or 16 years and 2 months.
• Total interest would be about $247,741.

That's about $42,700 more interest than a true 15-year loan, because of the higher rate. But it gives you flexibility. If your income drops or a big expense comes up, you can go back to the $2,404 required payment.

Before you go this route, make sure your lender applies extra payments to principal and doesn't charge prepayment penalties.

When a 15-year mortgage may make sense

• The payment fits easily. A common check is the 28% rule. The 15-year payment here, plus about $500 a month of tax and insurance, would call for roughly $154,000 of income at 28%.
• You want to be debt-free by a set date, such as before retirement or before kids start college.
• You already have an emergency fund and are saving for retirement. A big mortgage payment shouldn't crowd those out.
• You value a guaranteed return. Every dollar of principal you pay off "earns" your mortgage rate by avoiding interest.

When a 30-year mortgage may make sense

• You need the lower payment to qualify or to keep your budget comfortable.
• Your income is uneven, such as commission, freelance or seasonal work. The lower required payment adds a cushion.
• You'd rather keep cash flexible for retirement accounts, an employer match, or other goals.
• You have higher-rate debt. Paying off a 22% credit card typically beats prepaying a 7% mortgage.

About investing the difference

Some people take the 30-year loan and invest the $679 monthly difference. As a hypothetical, $679.36 a month earning 6% a year would grow to about $197,600 after 15 years. At that point, the 30-year balance would still be $262,241. Investment returns aren't guaranteed, and you'd need to actually invest the money every month. Our compound interest calculator lets you try different return assumptions.

Questions to ask yourself

1. Could I still make the 15-year payment if my income dropped 10% to 20%?
2. Am I already contributing enough to get any employer 401(k) match?
3. Do I have three to six months of expenses saved?
4. How long do I expect to stay in this home?

If you answered "no" to the first three, a 30-year loan with optional extra payments may give you more breathing room. The CFPB has a useful loan term comparison guide as well.

Bottom line

A 15-year mortgage saves a lot, about $310,000 in interest on $350,000 at today's average rates, and builds equity far faster. The trade-off is a payment about $679 a month higher. A 30-year loan with extra payments is a flexible middle ground.

Run both terms with your own price, taxes and insurance in the mortgage calculator. To see how much payment your income supports, try the home affordability calculator, and if you already have a loan, check whether a new term pays off with the refinance break-even calculator.