15-Year or 30-Year Mortgage?

Assumptions on sliders · method reviewed September 7, 2026

Runs a 15-year and a 30-year mortgage side by side, with the same cash spent on both and the difference invested, and shows where each stands at year 15 and year 30. About

In plain words. A 15-year loan has a lower rate and a higher payment, and it ends in half the time. A 30-year loan has a lower payment, and a borrower who invests the difference every month builds something on the side. This tool spends the same money on both paths. On the first the 15-year payment goes to the loan, and after the loan is gone the whole payment is invested. On the second the 30-year payment goes to the loan and the difference is invested from the start. It shows what each path holds, less what it still owes, at year 15, at year 30, and at a year you choose, and the return that would make them equal.

Why it matters. It is the first decision on most mortgages and it is usually made on the payment alone. The payment is real, but so is the return the difference could earn, and the tool puts a number on both so the choice is about the rate gap and the risk rather than the monthly figure.

An example. $400,000 at 6.5% for 30 years or 6.0% for 15, with a 7.0% return on the difference: the payments are $3,375.43 and $2,528.27, $847 a month apart. At year 30 the 15-year path holds about $1,069,883 and the 30-year path about $1,033,505, so the 15-year is ahead by about $36,378 at that return. The break-even return is 7.3%.

Where it stops. The return is a guess, and it decides the answer. The tool holds the rates and the return steady, assumes the difference is actually invested every month, and takes tax from the return only at the rate you set. It leaves out the mortgage interest deduction, closing costs that differ between the two loans, mortgage insurance, and the value of a lower payment when income falls. Everything it leaves out.

Loan amount

What you would borrow, after the down payment.

30-year rate

15-year rate

Usually a fraction of a point below the 30-year rate. Both are on the lender's rate sheet.

Yearly return you expect on the invested difference

Before tax. The 30-year borrower invests the payment difference every month.

Tax taken from that return each year

Zero if the money would sit in a retirement account. Otherwise the share of each year's return that goes to tax.

Year to compare the two paths

The 15-year loan is gone at year 15 and both loans are gone at year 30. Both years are shown below whatever you choose here.

At year 15, the 15-year loan leaves more by

$21,720

Both paths spend the same cash every month, and the difference is invested at 7.0% after tax. The 15-year borrower is done at year 15 and then invests the whole payment. The 30-year borrower invests the difference from the first month and pays the loan for thirty years.

Monthly payment on the 15-year loan: $3,375.43; On the 30-year loan, $2,528.27. The difference of $847.16 a month is what the 30-year borrower invests
Interest over the life of the 15-year loan: $207,577; Over the life of the 30-year loan, $510,178, before counting what the invested difference earns
Return that makes the two paths equal at year 30: 7.3%; Before tax. Below it the 15-year leaves more. Above it the 30-year does

At year 15 the 15-year borrower owns the home clear with nothing yet invested. The 30-year borrower holds $268,516 of investments against $290,237 still owed, a position of minus $21,720. At year 30 both loans are paid. The 15-year path holds $1,069,883 and the 30-year path holds $1,033,505.

The plain rule is a sure return against an expected one. Taking the 15-year earns a guaranteed return on the payment difference at the break-even rate above, which sits at or above the 30-year rate because the whole loan is cheaper. Taking the 30-year is a bet that the investment beats that rate, and no year of it is guaranteed. The 30-year also buys room. Its payment is a floor that can always be paid faster, and the invested difference can be sold. The 15-year payment is a commitment, and the equity it builds cannot be spent without selling or borrowing.

This is an assumption tool, and the rates and the return are yours to set. It spends the same cash on both paths every month, holds the rates and the return steady, and takes tax from the return only at the rate you set. It leaves out the mortgage interest deduction, closing costs that differ between the two loans, mortgage insurance, and what a lower payment is worth when income falls. Method reviewed September 7, 2026. Hypothetical; educational, not advice.

This is a simplified model, not your actual tax return or plan. It only knows what you type in, leaves out rules that may apply to you, and cannot weigh the other facts and trade-offs a real decision depends on. Before you act, talk with a professional who knows your whole situation.

Educational only, not investment, tax, or legal advice. Results are hypothetical estimates that vary with each use and over time and are not guaranteed accurate or complete. Using this tool creates no client relationship with Considerate Capital, and the site that linked here is not affiliated with it. By using it you agree to the tool terms.