30-Year vs 15-Year Mortgage Calculator: Which Saves More Money?

The 15-year mortgage saves $147,000 in interest on a $300,000 loan. The number sounds decisive. But the higher monthly payment means less money available to invest, and if your investments return more than your mortgage rate, the 30-year actually wins. Here is how to calculate which one is right for your situation.

The Raw Numbers

$300,000 loan, 6.75% on a 30-year, 6.10% on a 15-year (15-year rates are typically 0.5 to 0.75% lower):

| | 30-Year | 15-Year | |--|---------|---------| | Monthly Payment | $1,946 | $2,557 | | Payment Difference | — | +$611/month | | Total Interest Paid | $400,560 | $160,260 | | Interest Savings | — | $240,300 | | Loan Free In | 30 years | 15 years |

The 15-year saves $240,300 in interest and gets you debt-free 15 years earlier.

Use the CalcMoney Mortgage Calculator to run this comparison with your actual loan amount and rates.

The Opportunity Cost Question

The 15-year costs $611 more per month. What happens if that $611 goes into investments instead?

If you invest $611 per month in a diversified index fund returning 8% annually over 15 years:

• Future value: approximately $212,000

The interest savings from the 15-year is $240,300. The investment alternative produces $212,000. In this scenario, the 15-year is still better by about $28,000.

But at 10% investment returns:

• Future value of $611/month over 15 years: approximately $252,000

Now the 30-year plus investing wins by $12,000.

The break-even investment return that makes the 30-year equal is roughly 8.5% in this example. If you expect to beat 8.5% consistently, take the 30-year. If you do not, take the 15-year.

The Real Variables

The math above assumes discipline. The 30-year only wins if you actually invest the payment difference every month for 15 years. Most people do not. If the extra cash gets absorbed into lifestyle spending, the 15-year wins by default.

Other factors that shift the comparison:

Tax bracket: Mortgage interest is deductible if you itemize. Higher earners in high-tax states get more value from deductibility, which lowers the effective cost of the 30-year.

Job security: The 15-year payment is not flexible. If income drops, a $2,557 payment is harder to maintain than $1,946. The 30-year gives you a lower floor.

Time horizon: If you plan to sell in 7 years, neither loan goes to term. The 15-year builds equity faster, which matters more if you expect to move.

PMI: If your down payment is under 20%, the faster equity buildup from a 15-year can eliminate PMI sooner, reducing that calculation.

Who Should Pick the 15-Year

• High income, stable job, no dependents relying on income continuity
• Planning to stay in the home 15+ years
• Investment discipline is not a strength (forced savings through the mortgage)
• Within 15 years of retirement and want to be debt-free before stopping work

Who Should Pick the 30-Year

• Income is variable (freelance, commission, seasonal)
• Maxing out retirement accounts is a priority (HSA, 401k match is free money)
• Home is a likely stepping stone and you will sell within 10 years
• Investment returns have historically beaten 8.5% in your portfolio

The Hybrid Strategy

Take the 30-year but make extra principal payments to match a 15-year schedule. You get the flexibility of the lower required payment but pay down the loan as fast as the 15-year if cash flow allows. When income dips, revert to the minimum. When bonuses hit, throw them at principal.

The downside: the 30-year rate is about 0.65% higher. That extra interest on the portion you carry longer does reduce the savings slightly.

Frequently Asked Questions

Can I refinance from a 30-year to a 15-year later?

Yes. If rates drop or your income rises, you can refinance. The decision is not permanent. Many buyers start on a 30-year for the lower required payment and refinance to a 15-year when income stabilizes.

How much faster do you build equity on a 15-year?

After 5 years on a $300,000 loan, the 15-year balance is roughly $249,000 while the 30-year balance is roughly $280,000. That $31,000 equity difference compounds over time.

What is the difference in total interest if rates are equal?

Even at the same rate, the 15-year saves substantially because you are paying interest for half the time. At 6.75% on $300,000: 30-year total interest is $400,560 vs 15-year total interest of $193,265. The rate discount on 15-year mortgages makes the gap even wider.