15-Year vs 30-Year Mortgage

On a $400,000 loan at 6.5% for 30 years, the principal-and-interest payment is roughly $2,528, and total interest over the full term is about $510,000.

The same $400,000 at 5.9% for 15 years runs roughly $3,352 per month, with total interest of about $203,000.

That's about $824 more per month, but roughly $307,000 less interest — assuming you hold both loans to term. Actual rates vary by lender, credit profile, and market conditions.

Lenders take on less duration risk over 15 years, so shorter terms are usually priced a quarter to three-quarters of a point below 30-year rates.

You also build equity far faster, which matters if you may want a HELOC or plan to sell within a decade.

Flexibility. A 30-year loan with voluntary extra principal payments can approximate a 15-year payoff — but you can stop paying extra in a hard month. A 15-year commitment cannot be dialed back.

Qualification. The lower payment on a 30-year loan improves your debt-to-income ratio, which can be the difference between approval and denial.

Opportunity cost. If your expected return on invested cash exceeds your mortgage rate, the longer term can be the better financial choice.