On a $350,000 mortgage at today's rates, choosing a 30-year term over a 15-year term costs an extra $295,000 in interest. That's not a small rounding difference — it's the price of flexibility.
Neither term is universally better. Here's the full picture so you can compare them clearly before you decide.
Side-by-Side Comparison: $350,000 Loan at 7%
Using a $350,000 loan with a 30-year rate of 7% and a 15-year rate of 6.35% (the typical rate spread between the two terms):
| 30-Year at 7% | 15-Year at 6.35% | |
|---|---|---|
| Monthly payment | $2,329 | $3,022 |
| Total paid | $838,440 | $543,960 |
| Total interest | $488,440 | $193,960 |
| You save | $294,480 with the 15-year | |
The monthly difference is $693. That's what the 15-year costs extra each month to save nearly $295,000 over the life of the loan. Whether that trade-off makes sense depends entirely on your financial situation.
Why the Interest Gap Is So Large
Two forces compound together to create that $295,000 gap:
- Shorter term — you pay interest for 15 years instead of 30, so there are 180 fewer months of compounding.
- Lower rate — the 15-year mortgage typically comes with a rate 0.5–0.75% below a 30-year, because lenders take on less risk with a shorter loan.
Remove either factor and the gap shrinks. Together, they make the 15-year dramatically cheaper in total cost.
Equity Build-Up: How Fast You Own Your Home
Beyond total interest, the two loans differ sharply in how fast you accumulate equity. On a $350,000 loan, after 5 years:
- 30-year: balance ~$323,000 — you've paid off about $27,000
- 15-year: balance ~$264,000 — you've paid off about $86,000
The 15-year borrower has more than three times the equity after five years. That matters when you sell, refinance, or tap a home equity line.
The Case for the 30-Year
Despite the higher interest cost, the 30-year has genuine advantages that make it the right choice for many borrowers.
Cash flow flexibility. The $693/month difference can fund an emergency reserve, max out retirement contributions, or simply prevent financial stress during slow months. That flexibility has real, measurable value — especially early in a career.
Voluntary extra payments beat forced higher payments. You can take a 30-year mortgage and pay extra principal every month to approximate a 15-year payoff. If finances tighten, you drop back to the minimum. The 15-year gives no such option.
Investment opportunity cost. If your mortgage rate is lower than what you can reliably earn investing, the $693/month deployed into the market may outpace the interest savings. At 7%, this math is closer than it was at 3%.
The Case for the 15-Year
The 15-year tends to make sense when:
- The higher payment fits comfortably — meaning you can make it even in a lean month
- You're buying later in life and want to be debt-free before retirement
- You have stable income and fully-funded retirement accounts already
- The forced paydown discipline is the point — you want the commitment to eliminate the debt
The 30-Year Tends to Make Sense When
- The lower payment frees up money for retirement accounts with an employer match (that's guaranteed return)
- Your income is variable, you're early in your career, or you have other financial goals competing for the $693/month
- You plan to move or refinance within 7–10 years, reducing the interest advantage of the 15-year
- You want the flexibility to pay like a 15-year but need the safety net of a lower minimum
The Break-Even Point
If you plan to sell or refinance within a few years, the 15-year's interest savings shrink considerably. You need to hold the loan long enough to recoup the higher monthly payments through reduced interest. For most borrowers who stay in a home 7+ years, the 15-year clearly wins on total cost.
Run Your Own Numbers
The right answer depends on your exact loan amount, current rate offers, income, and goals. Use FinWiser's free mortgage comparison calculator to enter your numbers and see the exact monthly payment, total interest, and equity timeline for both options side by side.