15-Year vs 30-Year Mortgage: What the Numbers Show on a $400,000 Loan

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By De Van Do -- Published October 25, 2026 -- 9 min read

The Short Version

A 15-year mortgage costs much less in total interest and builds equity far faster. A 30-year mortgage costs much less each month and leaves you room to handle surprises. Both of those statements are true at the same time, and the useful question is how big each difference is for a real loan.

This article puts the same $400,000 loan through both terms and lists every figure that matters. All payments and totals below are principal and interest only. They leave out property tax, homeowners insurance, and mortgage insurance, which change with the home and the lender. The 30-year figures use the 7.00% rate that the rest of this site uses as its standard example, and the numbers can be reproduced in the mortgage calculator.

The CFPB makes the same basic point in its guide to loan terms: a shorter term generally costs less overall but has a higher monthly payment, and the rate on a shorter term is usually lower, by as much as a full percentage point. The sections below show what that looks like in dollars.

Where the Rates Come From

Rates differ by lender, credit profile, and the day you apply, so any comparison has to state its assumptions. Freddie Mac publishes a weekly survey of average rates. As of October 22, 2026, it reported 7.32% for a 30-year fixed loan and 6.68% for a 15-year fixed loan. A week earlier the figures were 7.40% and 6.71%.

Two cautions about those numbers. First, the survey is built from loan applications submitted through Freddie Mac's Loan Product Advisor tool, for borrowers with good or excellent credit who are buying an owner-occupied single-family home with 20 percent down. Your own offer could be higher or lower. Second, Freddie Mac says it does not report average fees and points, so the survey rate is not the whole cost of a loan.

The survey shows a gap of 0.64 percentage points between the two terms on that date. This article does not claim that gap is typical over time, because it only looked at the current weeks. To keep the example round and easy to follow, the main comparison below uses 7.00% for the 30-year loan and 6.25% for the 15-year loan, a gap of 0.75 points. Those two rates are illustrative, not quotes. A later section repeats the math using the survey rates.

The Main Comparison

Here is the same $400,000 loan under both terms.

30-year at 7.00%: monthly payment $2,661.21, total interest $558,036 over 360 payments.

15-year at 6.25%: monthly payment $3,429.69, total interest $217,344 over 180 payments.

The 15-year payment is $768.48 higher each month. In exchange, total interest is about $340,700 lower. Put another way, paying roughly $768 more every month for 15 years avoids paying about $340,700 in interest, which works out to about $2.46 of interest avoided for every extra dollar paid.

It helps to split that $340,700 into two causes. If the 15-year loan carried the same 7.00% rate as the 30-year loan, its payment would be $3,595.31 and its total interest would be $247,156. So the shorter term alone, with no rate discount, cuts interest by about $310,900. The lower rate in the example adds roughly another $29,800 of savings. The bulk of the benefit comes from the shorter term itself, not from the rate discount.

Equity After 5 and 10 Years

Most of a 30-year payment goes to interest in the early years. In the first year of the 30-year loan, $27,871 of the payments is interest. On the 15-year loan, first-year interest is $24,529, even though the payments are larger, because so much more principal is being repaid each month.

The effect on what you own is large. After 60 payments, the 30-year borrower has repaid $23,474 of principal. The 15-year borrower has repaid $94,541. That is a difference of about $71,100 in loan balance after five years. After 120 payments, the gap in remaining balance has grown to about $166,900.

This matters if you might sell or refinance in the first decade, which many owners do. A larger principal paydown means more of the sale price comes back to you at closing. It matters less if you plan to stay for the full term, because the loan balance reaches zero on both paths. It also depends on home prices, which can fall as well as rise, so principal paydown is the only part of equity you control.

Can You Qualify at the Higher Payment?

Lenders compare your monthly debt payments to your gross monthly income. The CFPB defines this ratio as all monthly debt payments divided by gross monthly income, and notes that limits differ by loan product and lender.

Here is an illustration, not a rule. Suppose gross income is $100,000 a year, or $8,333 a month. The principal and interest payment alone is $2,661 on the 30-year loan, which is about 31.9% of gross monthly income. On the 15-year loan, the payment alone is $3,430, or about 41.2%. That is before tax, insurance, and any car or student loan payments are added to the ratio.

For conventional loans sold to Fannie Mae, the Selling Guide (version dated April 2, 2025) sets a maximum debt-to-income ratio of 36 percent for manually underwritten loans, up to 45 percent if the borrower meets credit score and reserve requirements, and 50 percent for loans approved through its automated underwriting system, with exceptions. Under those limits, a household that comfortably qualifies for the 30-year loan may fall short on the 15-year loan for the same house. If that happens, the realistic choices are a smaller loan, a larger down payment, or the longer term.

A Middle Path: A 30-Year Loan With Extra Payments

There is a way to get much of the 15-year benefit while keeping the 30-year payment as the required minimum. Take the 30-year loan at 7.00% and voluntarily add extra principal each month.

If you add the full $768.48 difference every month, the 30-year loan is paid off in 197 months, or 16 years and 5 months, and total interest is $272,494. That is $285,500 less than making only the required payments. It is still about $55,100 more interest than the 15-year loan at 6.25%, and the reason is the higher rate, not the timing.

A smaller version works too. Adding $500 a month to the 30-year loan pays it off in 19 years and 3 months and saves $229,826 in interest. The key difference from a true 15-year loan is flexibility. If money gets tight, you can drop back to the required $2,661.21 with no penalty from the loan terms, as long as nothing in your note says otherwise. Our extra payment math article explains how the savings build over time.

Before relying on this, check your documents. The CFPB notes that some mortgages have a prepayment penalty and some do not, and small extra principal payments usually do not trigger one, but you should read the fine print. Federal rules restrict these penalties for covered loans: where one is allowed, it cannot apply after three years from closing and is capped at 2 percent of the amount prepaid in the first two years and 1 percent in the third year.

The Same Math at Freddie Mac Survey Rates

Using the October 22, 2026 survey rates instead of the round example rates, the same $400,000 loan looks like this.

30-year at 7.32%: monthly payment $2,747.72, total interest $589,180.

15-year at 6.68%: monthly payment $3,524.13, total interest $234,344.

The payment gap is $776.41 a month, and the interest difference is about $354,800. The picture is the same as before: roughly $776 more each month in exchange for about $355,000 less interest over the life of the loan. These survey rates will have changed by the time you read this, so treat the figures as a dated example and run your own quote through the calculator.

When the 15-Year Loan Is the Wrong Move

The 15-year loan is not automatically the wise choice just because it saves interest. It is the wrong move in several common situations.

It can be wrong when it drains your cash cushion. A required payment of $3,430 a month is a fixed obligation. If a job loss or medical bill hits, a 30-year borrower with a $2,661 payment has about $768 a month more breathing room, and a voluntary extra payment can simply be skipped. A required payment cannot.

It can be wrong when you have higher-cost debt. If you are carrying balances that cost more than your mortgage rate, paying those down first is usually better than prepaying a 7% mortgage. The same logic applies to missing out on an employer retirement match, which the extra mortgage payments would crowd out.

It can be wrong when you will not stay long. If you expect to move or refinance within a few years, you gain the principal paydown, but you also take on a payment you may have no need for. In that case the lower payment often matters more.

It can be wrong when your income is variable. Commission, seasonal, or self-employed income argues for the flexibility of a low required payment, with extra payments made in strong months.

And it is a strong choice when income is stable, the emergency fund is full, other debts are handled, and the goal is to own the home outright before a known date such as retirement.

How to Run Your Own Comparison

Get actual rates for both terms from the same lender on the same day, because the Loan Estimate lets you compare them line by line. Enter the loan amount and each rate into the mortgage calculator and record four numbers for each term: the monthly payment, total interest, the balance after five years, and the balance after ten years.

Then run a third scenario: the 30-year loan with extra monthly payments equal to the payment gap. Compare the interest and the payoff date to the 15-year result. If the 15-year rate is only slightly lower than the 30-year rate, the extra-payment route captures almost all of the benefit with far less risk. If the rate gap is large, the 15-year loan gets more attractive, though it still carries the higher required payment.

Finally, check the payment against your budget with all housing costs included, not just principal and interest. If the full monthly cost leaves little room for savings and surprises, the longer term is probably the safer foundation, with extra payments as a tool you use when you can.

Open the Mortgage Calculator

Enter your own loan and compare a 15-year and a 30-year side by side.

Related guides

The Real Math Behind Extra Mortgage Payments (I Ran the Numbers)
What an extra $100, $300, or $500 a month actually does to a $400,000 loan: payoff date, total interest saved, and why biweekly payment plans are just one extra payment in disguise.

What 30 Years of a Mortgage Actually Costs (I Added It All Up)
I took a $500,000 house with 20% down and ran the full thirty year total through the True Cost Calculator. The house costs 2.85 times its price, and that figure is the floor, not the ceiling.

How Much House You Can Afford (I Ran the Lender Math)
On a $90,000 income the lender maximum comes to about $282,429, and it needs $43,128 in cash. I also found that the rate moves your buying power more than anything you can control.

Sources

Facts, limits and rules on this page were checked against these primary sources on October 25, 2026.

About the author

De Van Do has a background in technology and built VisualMortgage out of curiosity about making mortgage math transparent. De Van Do is not a licensed loan officer or mortgage broker -- for advice specific to your situation, consult a licensed mortgage professional. Read more about VisualMortgage.

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