15 vs 30-Year Mortgage: The Complete Comparison
A 15-year mortgage saves over $100,000 in interest but costs $700+ more per month. Which is right for you?
A $300,000 mortgage at 6% for 30 years: $1,799/month, $347,515 total interest. Same loan for 15 years at 5.5%: $2,451/month, $141,180 total interest. The 15-year loan saves $206,335 in interest but costs $652 more per month. That is the core trade-off: lower total cost versus higher monthly cash flow.
When to Choose 15 Years
You can comfortably afford the higher payment (housing stays under 25% of gross income). You want to be mortgage-free before retirement. You are disciplined and would not invest the difference anyway. You want the forced savings of accelerated equity building.
When to Choose 30 Years
The higher payment would strain your budget. You can invest the $652 monthly difference at returns above the mortgage rate (historically likely with stock market returns). You want more cash flow flexibility for emergencies, opportunities, or lifestyle. You plan to pay extra when possible but want the safety net of a lower minimum payment.
The Math Secret
Take the 30-year loan but make 15-year payments when you can. You get the flexibility of the 30-year minimum with the interest savings of the 15-year schedule. If money gets tight, you can drop back to the lower payment without refinancing. This hybrid approach gives you the best of both worlds.