← Blog · May 24, 2026 · mortgage, decision
15-Year vs 30-Year Mortgage: 2026 Decision Framework
Pick the 15-year if you can comfortably absorb a payment about 30% higher than the 30-year and still fund retirement — otherwise the 30-year with optional extra principal wins on flexibility. The 15-year saves roughly $250,000 in interest on a typical $320,000 loan but costs you the option to ease up in a bad year.
The numbers, side by side
On a $320,000 loan (a $400k home with 20% down) at 2026 rates — about 7% for a 30-year and 6.5% for a 15-year — here is what each looks like over the full life of the loan.
| Term | Rate | Monthly P&I | Total interest | Total paid |
|---|---|---|---|---|
| 30-year | 7.00% | $2,129 | $446,428 | $766,428 |
| 15-year | 6.50% | $2,788 | $181,815 | $501,815 |
| Difference | −0.50% | +$659/mo | −$264,613 | −$264,613 |
The 15-year costs $659 more per month but saves $264,613 in interest. That is the headline. Now read the next paragraph before deciding.
The hidden cost of the 15-year: opportunity
That extra $659/month invested at 7% nominal for 15 years grows to about $209,000. The 30-year-plus-invest path lags the 15-year payoff by about $55,000 — but you also have $209,000 in liquid assets that the 15-year person does not. Liquidity has its own value, especially during a layoff.
At lower mortgage rates (sub-5%) this flips. The 30-year-plus-invest path wins outright because the market return cleanly exceeds the mortgage rate. At 2026 rates the gap is narrow enough that personality matters more than math.
Who should pick the 15-year
- Household income comfortably covers the higher payment plus full retirement contributions plus a 6-month emergency fund.
- You are 45+ and want the house paid off before retirement.
- You know yourself — if the difference goes into the loan rather than a brokerage account, you will actually save it.
- You value the psychological certainty of a paid-off house more than the optionality of a brokerage balance.
Who should pick the 30-year (and pay extra)
- Income is variable — commissions, self-employed, equity-heavy comp.
- You are early career and salary will grow significantly.
- You have not maxed retirement accounts yet (do that first).
- You want flexibility to drop back to the contractual minimum during a job loss, parental leave, or family emergency.
On a 30-year, an extra $400/month against principal cuts the loan to about 22 years and saves roughly $170,000 in interest. You get most of the 15-year benefit while keeping the option to stop in a bad month.
The break-even on the rate spread
Banks typically price the 15-year about 0.5% below the 30-year. If the spread shrinks to 0.25% or less, the 15-year loses some of its appeal — you are paying more per month for a smaller rate discount. If the spread widens to 0.75% or more (which happened in 2023-2024), the 15-year is meaningfully more attractive. Always shop both terms from the same lender on the same day.
What about the 20-year?
Some lenders offer a 20-year as a middle ground. On the same $320,000 loan at roughly 6.75%, the payment is $2,431 — only $302 more than the 30-year, but total interest drops to about $263,000. It saves $183,000 versus the 30-year while costing less than half the monthly bump of the 15-year. Worth asking about if the 15-year payment is too tight.
Run your scenario
- Mortgage Calculator — compare both terms with your actual numbers
- Biweekly Mortgage — turn a 30-year into a ~26-year
- Affordability Calculator — see if the 15-year payment fits your DTI
- Refinance Calculator — if you already have a 30-year, math the swap
- Compound Interest — what the payment difference does if invested instead