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Key takeaways
- On $300,000 with a 6.5% 30-year rate and a 5.75% 15-year rate, the payments are $1,896.20 and $2,491.23, a difference of $595.03 a month.
- Total interest is about $382,633 for the 30-year and $148,421 for the 15-year, a saving of about $234,212.
- Investing the $595.03 difference for 15 years would have to earn about 8.6% a year, every year, to equal the 15-year loan.
- If both loans had the same rate, the break-even return would equal that rate (6.5% in this example).
What this 15 vs 30 year mortgage calculator does
You enter the loan amount and a rate for each term. The calculator shows both payments, the total interest on each, how much the 15-year saves, and the balance you would still owe on the 30-year loan after 15 years. It then answers the common question: what if I take the 30-year and invest the difference? It does that by finding the yearly return the invested difference would need to match the 15-year loan.
How it is calculated
Each payment is the standard fixed-rate payment M = L × r × (1 + r)n ÷ ((1 + r)n − 1). Total interest is the payment times the number of payments minus the loan. For the break-even, the calculator takes the monthly difference between the two payments, grows it for 180 months at a candidate return, and finds the return at which the result equals the 30-year balance after 15 years.
Worked example: $300,000
| 30-year at 6.5% | 15-year at 5.75% | |
|---|---|---|
| Monthly principal & interest | $1,896.20 | $2,491.23 |
| Total interest | $382,633 | $148,421 |
| Balance after 15 years | $217,677 | $0 |
The 15-year costs $595.03 more each month. If you invested that difference at 5% a year, it would grow to about $159,044 in 15 years, which is $58,634 short of the $217,677 you would still owe. At the same 6.5% rate on both loans, the difference is $717.12 a month, the 15-year saves about $212,235 in interest, and the break-even return is 6.5%. The rates here are illustrations, not quotes.
Which one fits you
The 15-year suits
People with stable income who can comfortably afford the higher payment, already hold an emergency fund, and want to be debt-free sooner.
The 30-year suits
People who want the lowest required payment, need room in the budget, or want to put money toward other goals. You can still pay extra principal; see the payoff calculator.
Before you choose
Check the full monthly cost with taxes, insurance and PMI in the mortgage calculator, and see our 15-year vs 30-year guide. If rates fall later, the refinance calculator shows whether switching terms pays off.
Estimate for fixed-rate loans, principal and interest only. The investment comparison is an illustration that ignores taxes, fees and risk. Not financial advice.
Frequently asked questions
How much interest does a 15-year mortgage save?
On a $300,000 loan, the 15-year loan at 5.75% costs about $148,421 in interest and the 30-year at 6.5% costs about $382,633, a saving of about $234,212. Even at the same 6.5% rate on both, the 15-year saves about $212,235.
Why is the 15-year rate usually lower?
Lenders take on less long-term rate risk with a shorter loan, so they often offer a lower rate. The gap varies day to day, so enter real quotes for both terms.
What is the break-even return?
If you take the 30-year loan and invest the monthly difference instead of paying it on the 15-year, the break-even return is the yearly return that investment must earn so that, after 15 years, it equals the balance you still owe on the 30-year loan. Below that return, the 15-year loan comes out ahead on this measure; above it, the 30-year plus investing does.
Is investing the difference better?
It can be, but it relies on returns that are not guaranteed and on you actually investing the difference every month. The 15-year loan makes the saving automatic and certain. The calculator also ignores taxes and the mortgage interest deduction, which can change the result.
Which is easier to qualify for?
The 30-year loan, because its lower monthly payment fits more easily into debt-to-income limits. Check what you can afford before you decide.
Can I get the best of both?
Partly. You can take the 30-year loan and make extra principal payments, which pays it off sooner while keeping the option to fall back to the lower required payment. See the payoff calculator for the effect.