Updated April 29, 2026
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On a $350,000 mortgage, choosing a 15-year term over a 30-year term will likely save you somewhere in the range of $150,000 to $200,000 in total interest paid, depending on the rate spread between the two. You will also pay about 40 percent more each month to get there. That is the whole tradeoff, and it deserves honest math before you pick a side.
The numbers, side by side
Freddie Mac's Primary Mortgage Market Survey consistently shows 15-year fixed rates running about 0.5 to 0.75 percentage points below 30-year rates. The table below uses $350,000 borrowed, with 6.5% for the 30-year and 5.9% for the 15-year, which reflects a typical historical spread.
| Metric | 15-Year (5.9%) | 30-Year (6.5%) |
|---|---|---|
| Monthly payment (P+I) | $2,936 | $2,213 |
| Total paid over term | $528,480 | $796,680 |
| Total interest paid | $178,480 | $446,680 |
| Interest saved vs. 30-year | $268,200 | -- |
| Extra monthly cost vs. 30-year | +$723/mo | -- |
The $723 monthly difference is real cash that leaves your account for 15 years. Use the mortgage calculator to plug in your actual loan amount and current rate quotes before you anchor to these numbers.
Why the rate is lower on a 15-year loan
Shorter loan terms carry less risk for the lender. A borrower who defaults in year 12 of a 15-year mortgage still has significant equity, and the lender has received 12 years of payments. The same default in year 12 of a 30-year mortgage is much messier for everyone involved. Lenders price that reduced risk with a lower rate, which compounds the savings on top of the shorter term. It is not charity; it is math.
The opportunity cost argument
The most common counterargument to the 15-year goes like this: take the 30-year, invest the $723 monthly difference in an index fund, and you may end up richer after 30 years than you would be with a paid-off house. This argument has real math behind it. If you invest $723 a month for 30 years at a 7% annualized return, you accumulate roughly $876,000, which far exceeds $268,000 in interest savings.
The problem is the word "if." Most households that choose the 30-year do not systematically invest the difference. They spend it. The 15-year mortgage works precisely because it is compulsory. It forces the savings. For anyone who would genuinely and consistently invest the payment gap in a retirement account over 30 years, the math can favor the 30-year. For everyone else, it usually does not.
When the 30-year is the smarter choice
Cash flow matters more than total interest in some situations. If your income is variable (freelance, commission-based, seasonal), a lower required payment gives you breathing room in slow months. A 30-year mortgage on a house you can comfortably afford beats a 15-year mortgage that puts you one bad quarter away from financial stress.
New buyers in expensive markets often have no practical choice anyway. If the 15-year payment exceeds what you can qualify for based on debt-to-income ratios, the discussion is academic. See how much mortgage you can afford before running the rate comparison.
The 30-year also wins if your alternative rate on debt is high. If you are carrying credit card balances at 22%, the guaranteed return on eliminating that debt beats paying down a 5.9% mortgage. Sequence matters.
When the 15-year is the obvious choice
You are a good candidate for the 15-year if your income is stable, the monthly payment is comfortably below 28% of your gross monthly income (the standard front-end debt-to-income guideline), you have no high-interest debt, and you are already contributing enough to retirement accounts to get any employer match. In that scenario, locking in a lower rate and a shorter payoff is a well-documented financial move with a concrete, quantifiable payoff.
Being mortgage-free 15 years earlier is also not strictly a financial argument. Some people weight the reduced-obligation quality of life very highly. That is a legitimate input to the decision, and no spreadsheet should be allowed to talk you out of it.
The hybrid option: take the 30-year and pay it like a 15
One practical middle path: take the 30-year mortgage, but make extra principal payments each month equivalent to what a 15-year payment would require. You will pay off the loan in roughly 15 years and save most of the same interest. The difference from a true 15-year is that you are not contractually obligated to the higher payment. If your income drops, you can fall back to the minimum 30-year payment without going into default.
This requires genuine discipline. The extra payment cannot be optional in practice if it is optional on paper. But for borrowers with irregular income or high job-change risk, it is a sensible structure. The amortization explainer shows exactly how extra principal payments accelerate payoff.
Tax deduction: smaller factor than most people think
The mortgage interest deduction is frequently cited as a reason to prefer the 30-year, on the theory that more interest paid means a bigger deduction. This argument mostly fell apart after the Tax Cuts and Jobs Act of 2017 nearly doubled the standard deduction. The IRS standard deduction for 2025 is $15,000 for single filers and $30,000 for married couples filing jointly. Most homeowners do not itemize, and those who do should run the actual tax math rather than assume the deduction changes the loan-term decision in any significant way. See IRS Topic 505 on interest deductions for the current rules.
How to decide
Start with affordability. If you cannot comfortably make the 15-year payment while also funding an emergency account and your retirement contributions, take the 30-year. Then ask honestly whether you would invest the difference. If yes, the 30-year with disciplined investing may serve you better. If no, or if you value simplicity and the forced savings of a shorter term, the 15-year is probably the right call for your situation.
Understanding how APR differs from the interest rate on each offer will help you compare loan quotes accurately when you start shopping.
Payment figures are illustrative and use fixed rates. Actual rates vary by lender, credit score, and market conditions. Not financial advice.
Run your numbers
Compare the monthly payments and total interest for both loan terms in seconds.