Interest saved (15-yr)
$282,912
guaranteed mortgage savings
Example calculation
Yes, 15-year mortgage pays
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Extra monthly payment
+$719/mo
15-yr vs 30-yr
Year-15 net advantage
+$45,000
when 15-yr loan is paid off
Year-30 net advantage
+$12,000
after catch-up investingSide-by-side breakdown
| Metric | 15-year mortgage | 30-year mortgage |
|---|
Sensitivity to investment return
How after-tax wealth at year 30 changes across portfolio return assumptions:
| Annual return | 15-yr portfolio (yr 30) | 30-yr portfolio (yr 30) | 15-yr net advantage |
|---|
Frequently asked questions
How much lower is a 15-year mortgage rate compared to a 30-year?
Historically, 15-year fixed mortgages average 0.50 to 0.80 percentage points lower than 30-year fixed mortgages in Freddie Mac's weekly survey because lenders face lower prepayment and duration risk.
Why does the 15-year borrower also have an investment portfolio at year 30?
To make an apples-to-apples cash-flow comparison over 30 years, once the 15-year mortgage is paid off at month 180, the borrower redirects the freed-up mortgage payment into investments for years 16 through 30.
What if I take a 30-year mortgage and make 15-year payments?
Making extra principal payments on a 30-year loan gives you payment flexibility in a job loss, but you still pay the higher 30-year interest rate. That rate spread usually costs tens of thousands of dollars more than a true 15-year note.
Why does the share of monthly savings invested matter so much?
The 30-year + invest strategy only beats a 15-year mortgage if you consistently invest the monthly payment difference for 15 straight years. If half of the monthly savings goes to lifestyle spending, the forced equity of a 15-year mortgage wins by a wide margin.
Benchmark sources and dates
Starting assumptions are example benchmarks, not binding quotes. Change any input to match your own bills or offers.
| Assumption / Input | Starting value | Source | Checked |
|---|---|---|---|
| Mortgage loan amount | $360,000 | U.S. Census Bureau and HUD Median Home Sales Price | 2026-10-12 |
| 30-year fixed mortgage rate | 6.6% | Freddie Mac Primary Mortgage Market Survey | 2026-10-12 |
| 15-year fixed mortgage rate | 5.9% | Freddie Mac Primary Mortgage Market Survey | 2026-10-12 |
| Expected investment return | 7.0% | S&P Dow Jones Indices U.S. Equities Benchmark | 2026-10-12 |
| Long-term capital gains tax rate | 15% | Internal Revenue Service Topic No. 409 Capital Gains and Losses | 2026-10-12 |