15-year vs 30-year mortgage: the real math on a $400k loan

The 15-year mortgage saves you about $341,000 in lifetime interest on a $400,000 loan at current rates. That is the honest headline. The less honest headline is that the 30-year still wins for most people, because the 15-year payment is 22% higher and that difference either becomes investment capital (if you are disciplined) or an emergency cushion (if you are human).

This post walks through the real math on a $400,000 mortgage at 2026 rates, shows what happens if you invest the difference, and gives you a clean decision framework at the end. No cheerleading for either side.

The raw numbers on a $400k loan

Lenders price the 15-year about 0.75 percentage points below the 30-year because the loan is less risky: shorter duration, faster amortization, and borrowers who qualify tend to have stronger finances. At 2026 levels you are looking at roughly 7.00% on a 30-year and 6.25% on a 15-year for conforming loans with good credit.

Plug a $400,000 loan into both:

• 30-year at 7.00%: $2,661 per month in principal and interest. Over 360 payments you pay $958,036. Interest alone: $558,036.
• 15-year at 6.25%: $3,430 per month. Over 180 payments you pay $617,436. Interest alone: $217,436.

The 15-year costs $769 more per month. In exchange, you save $340,600 in interest and own the house outright 15 years sooner. On paper, it looks like a no-brainer. It is not.

Why most people still should take the 30-year

Three reasons, in order of importance: flexibility, behavioral reality, and emergency fund protection.

Flexibility. A 30-year mortgage is a 30-year mortgage with a minimum payment of $2,661. That does not stop you from paying $3,430 any month you want. You can treat a 30-year like a 15-year on good months and drop back to $2,661 on months when the water heater explodes. The 15-year is a legal obligation of $3,430 every single month, with a late fee and a credit hit if you miss it.

Behavioral reality. The standard counterargument ("take the 30-year and invest the difference") only works if you actually invest the difference. Studies consistently show that most people spend some or all of the gap. If you know yourself and the $769 will vanish into takeout and streaming subscriptions, the forced savings mechanism of the 15-year is a feature, not a bug.

Emergency fund protection. A job loss or medical event is much easier to survive with a $2,661 payment than a $3,430 payment. That $769 monthly difference is cash flow oxygen. In a true emergency you cannot call the bank and ask to temporarily switch from 15-year terms to 30-year terms. You can, however, stop making extra principal payments on a 30-year instantly.

The invest-the-difference argument, done honestly

Here is the math if you actually do it. Take the 30-year, invest $769/month in a broad stock index fund earning 7% real return, for 30 years:

$930,000 at the end of year 30. That is the number the 30-year-plus-invest camp points at.

The catch: the 15-year buyer is done with payments at year 15, so they also get 15 years to invest their full $3,430 monthly payment. At 7% real return that compounds to about $1,090,000 by year 30. So the 15-year path ends up ahead, by roughly $160,000, if both sides invest what they save.

But that assumes perfect discipline for 30 years. Real-world investing rates for people who choose the 30-year with intent to invest the difference tend to be closer to 50 to 70% of the theoretical amount. Drop the monthly investment to $500 and the 30-year path ends at roughly $605,000, well behind the 15-year path.

Net takeaway: the 30-year wins only if you actually invest consistently. If you do, it wins comfortably. If you don't, the 15-year is almost always better.

Cash flow: the 22% that changes your life

Forget total interest for a second. Look at the monthly payment gap: $2,661 vs $3,430. The 30-year payment is 22.4% lower. On a household earning $140,000 gross ($8,700 take-home), that is the difference between a comfortable budget and a tight one.

Lenders generally want your total housing payment (principal, interest, taxes, insurance, HOA) under 28% of gross income. At $140,000 gross that ceiling is $3,267/month. A $3,430 P&I payment before taxes and insurance puts you over that line. A $2,661 payment leaves room for the $500 to $800 per month that property tax and insurance typically add.

The 15-year only makes sense if the higher payment still leaves you with a healthy debt-to-income ratio, a fully funded emergency fund, and maxed retirement contributions. If any of those three things are not true, the 15-year is putting your house before your financial safety net.

Who should take the 15-year

There are real cases where the 15-year is the right answer. Four of them:

1. High earners with no spending discipline. If you make $250,000 and know the $769 will evaporate, lock it up in the mortgage. The forced amortization is a commitment device.
2. People within 15 years of retirement. A 50 year old who wants to retire at 65 mortgage-free has a clear argument for the 15-year. Walking into retirement with no housing payment cuts your required portfolio by 25 to 30x the annual mortgage cost.
3. Conservative investors who would park the difference in a savings account anyway. If your alternative is 4% HYSA, paying down a 6.25% mortgage is a guaranteed 225 basis point better return, tax-adjusted.
4. Residents of high state income tax states who max retirement accounts already. Once you are fully funding 401(k) and IRAs, the mortgage prepayment is one of the few remaining tax-efficient places to put marginal dollars.

Who should take the 30-year

Most people. Specifically:

• First-time buyers. Your expenses are about to change in ways you cannot predict. Take the lower payment.
• Anyone without a 6-month emergency fund. Build that first. The 15-year payment eats the cash you should be saving toward it.
• Anyone with debt priced above the mortgage rate. Credit cards at 24%, auto loans at 9%, student loans at 8%: every one of those is a better payoff target than a 6.25% mortgage. Take the 30-year, keep the lower payment, and kill the higher-rate debt first.
• Anyone not maxing retirement accounts. The $23,500 401(k) limit with employer match beats mortgage prepayment on almost any reasonable assumption. Fill that bucket before you overpay the mortgage.
• Self-employed or variable-income households. You need the flexibility to skip the $769 extra during slow months. The 30-year gives you that option legally. The 15-year doesn't.

The "30-year paid like a 15-year" strategy

This is the smartest middle ground for people torn between the two. Take the 30-year at 7.00%, then voluntarily pay $3,430 every month (or whatever the 15-year payment would be). What happens?

You pay off the loan in roughly 17 years instead of 30. Total interest comes in around $256,000, versus $217,000 for a true 15-year. You pay about $39,000 more in interest for the privilege of being able to drop back to $2,661 any month you need to.

That $39,000 is the insurance premium for flexibility. For most households it is worth it. The downside is the rate: you are paying 7.00% instead of 6.25%. In a world where 15-year rates are close to 30-year rates (sometimes within 0.25 points), the case for the pure 30-year-paid-early weakens.

The refi path: start 30, refi to 15 if rates drop

If you take the 30-year at 7.00% and rates drop to 5.25% for the 15-year within a few years, you can refinance into a 15-year with only a modest payment increase. At a $380,000 balance after 3 years, a 15-year at 5.25% runs about $3,055/month, only $394 more than your original 30-year payment.

This path gives you the best of both: a lower locked-in payment while rates are elevated, and the option to convert to an aggressive payoff schedule if rates come back down. Closing costs on a refi typically run 2 to 3% of the loan, so $8,000 to $12,000 on a $400,000 balance. The break-even is usually 2 to 3 years of interest savings.

The mortgage interest deduction is mostly a myth

You have probably heard that the 30-year is "better for taxes" because you pay more deductible interest. For almost all households in 2026, that is wrong. Two reasons:

First, the standard deduction is $15,000 single and $30,000 married filing jointly in 2026. You only benefit from itemizing if your mortgage interest, state and local taxes (capped at $10,000), and charitable giving together exceed the standard deduction. On a $400,000 mortgage at 7%, year-one interest is about $27,800. Add the $10,000 SALT cap and a married couple is at $37,800, only $7,800 above the standard deduction. The marginal tax benefit of the deduction is tiny: 22% of $7,800 is $1,716.

Second, that benefit shrinks every year. By year 15 of a 30-year mortgage, annual interest drops to about $17,000. Most of your itemizing benefit disappears.

The practical rule: assume you get no meaningful tax benefit from mortgage interest. If you end up with one, it is a bonus. Never use the deduction as a reason to take the longer term.

Five-question decision framework

Answer these honestly. Each "no" pushes you toward the 30-year. Each "yes" leans 15-year.

1. Do you have a fully funded 6-month emergency fund already? If no, take the 30-year.
2. Are you maxing tax-advantaged retirement accounts (401k, IRA) every year? If no, take the 30-year. Your retirement match and tax shelter beat mortgage prepayment.
3. Is all your other debt (credit cards, auto, student) at a rate below the 15-year mortgage rate? If no, take the 30-year and kill the higher-rate debt first.
4. Will the 15-year payment keep your housing cost under 28% of gross income? If no, take the 30-year. Otherwise you are house-poor on paper.
5. Do you have a track record of actually investing money you say you'll invest? If no, the 15-year's forced savings mechanism is worth it for you.

Four or five "yes" answers: the 15-year is a defensible choice. Three or fewer: take the 30-year, pay a little extra when you can, and refi into a 15-year if rates fall meaningfully.

Run the numbers on your actual loan

The $400,000 example here is a starting point. Your rate, loan size, down payment, and tax situation all shift the math. Run your own numbers before locking anything in, and compare at least three lenders. A 0.25% rate difference on $400,000 is $18,000 over 30 years.

The calculators below run entirely in your browser. No signup, no data leaves your device.

• Mortgage Calculator to compare 15-year and 30-year scenarios side by side with your actual numbers.
• Loan Calculator for general amortization schedules on any fixed-rate loan.
• Compound Interest Calculator to project what happens if you invest the monthly difference between the two terms.
• Refinance Calculator to check whether refinancing a 30-year into a 15-year pencils out at today's rates.

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