| Feature | 30-Year Fixed | 15-Year Fixed |
|---|---|---|
| Monthly payment | Lower | Higher (typically 35-50% more) |
| Interest rate | Higher (current market baseline) | Lower (typically 0.5-0.75% below 30-year) |
| Total interest over loan life | Significantly higher | Less than half of 30-year total |
| Equity built early | Slow (mostly interest in year 1) | Fast (significant principal from year 1) |
| Tax deduction benefit | Higher mortgage interest deduction | Lower mortgage interest deduction |
| Flexibility if income drops | Lower required payment is safer | Higher required payment is riskier |
| Payoff age (start at 35) | Free and clear at 65 | Free and clear at 50 |
The complete picture
The 15-year mortgage saves an enormous amount of total interest — typically over half compared to the 30-year on the same loan amount. On a $350,000 loan at today's rates, the lifetime interest savings can be $200,000+. The catch is the monthly payment is 35-50% higher.
Most American homeowners choose the 30-year because it maximizes buying power. The lower payment lets you buy a larger or better-located home with the same income. The downside is you pay roughly the loan amount again in interest over 30 years, and equity builds slowly in the early years.
A common middle ground is to take a 30-year and pay extra principal voluntarily, which gives you 15-year-like payoff with 30-year-like payment flexibility. The downside is most borrowers don't actually make the extra payments consistently — the 15-year forces the discipline that 30-year-with-extra-principal merely allows.
Frequently asked questions
Why is the 15-year rate lower than the 30-year?+
Shorter-duration loans carry less interest-rate risk for the lender, so they price lower. The spread between 15- and 30-year rates typically runs 0.5%-0.75% but varies with market conditions. In some environments, it's narrower; in others wider.
Can I convert a 30-year to a 15-year later?+
You can refinance from a 30-year into a 15-year if rates are favorable and the higher payment fits your budget. You can also just make additional principal payments on a 30-year, which produces 15-year-like payoff without the contractual commitment to higher payments.
Does 15-year really save that much interest?+
Yes. On a $350K loan at 6.5% (30-year) vs 5.875% (15-year), total interest paid is roughly $440K over 30 years vs $175K over 15 years. The 15-year saves about $265K — far more than 30-year-with-extra-principal in most realistic scenarios because of the rate discount.
Should I do a 20-year instead?+
20-year is a real product offered by many lenders and provides a middle ground. Rate is typically between 15-year and 30-year, and payment is meaningfully lower than 15-year while still saving substantial interest vs 30-year. Run all three quotes — sometimes 20-year is the sweet spot.