The 15-year mortgage wins the argument on paper every time. Lower rate, less than half the total interest, house paid off while you’re still earning. The reason most people don’t take it isn’t ignorance. The paper argument leaves out the part where you have to make the payment every month for fifteen years, including the bad ones.
Both numbers matter. Here they are together.
The rates, as of mid-August 2026
| Term | Average rate |
|---|---|
| 30-year fixed | 6.67% |
| 15-year fixed | 5.96% |
A 71 basis point discount. The 15-year is consistently cheaper for a structural reason: the lender’s money is exposed for half as long, so it prices less risk into the rate.
What that looks like on $400,000
Round numbers, principal and interest only. Taxes and insurance are left out, since they’re the same either way.
| 30-year at 6.67% | 15-year at 5.96% | |
|---|---|---|
| Monthly payment | roughly $2,570 | roughly $3,370 |
| Total interest | roughly $525,000 | roughly $206,000 |
| Difference | — | about $800/month more, about $319,000 less interest |
Those two numbers are the whole decision, and they pull in opposite directions.
The interest saving is enormous, more than three-quarters of the loan amount. The monthly difference is also enormous, and it isn’t optional. It’s a contractual obligation for 180 consecutive months, through job changes, medical bills, and whatever else happens across fifteen years of a life.
The question that actually decides it
“Which saves more” isn’t it. The 15-year does, obviously. The real question is: what does the extra $800 a month cost you elsewhere?
Work through it honestly:
- Do you have an emergency fund? If committing to the higher payment means you can’t build one, the 15-year is a bad trade. You’ll end up borrowing at credit-card rates for a car repair while congratulating yourself on mortgage interest saved. Where an emergency fund should live is the prerequisite here, not an afterthought.
- Is there employer retirement matching you’re not capturing? A match is an immediate, guaranteed return that a 5.96% mortgage rate does not beat.
- Is your income steady? Salaried and stable is a different risk profile from commission, freelance, or a single-income household.
- Would the payment leave any slack at all? A budget with zero room isn’t a plan, it’s a bet on nothing going wrong.
If you clear all four comfortably, the 15-year is excellent and you should take it. Most people don’t clear all four.
The third option most articles skip
Take the 30-year, then pay it like a 15-year when you can.
On the numbers above, adding roughly $800 a month voluntarily to the 30-year pays it off in a bit over fifteen years and saves the large majority of that interest. You give up a little (you’re paying 6.67% rather than 5.96% on the balance), so you don’t capture the full saving.
What you buy with that difference is the right to stop. In a month where the boiler dies or the hours get cut, your required payment is $2,570, not $3,370. The 15-year contract offers no such flexibility, and the flexibility is worth real money in the scenario where you actually need it.
One caution: this only works if you actually make the extra payments. “I’ll pay extra” is a plan a lot of people make and few sustain, which is the honest argument in the 15-year’s favour — it removes the discipline problem by making it compulsory. If you know yourself to be someone who won’t do it voluntarily, the contract is a feature.
Set the extra as an automatic transfer rather than a monthly decision, and check that your lender applies it to principal rather than holding it as a prepayment of next month’s bill.
Where the deciding factor usually lands
For most households the sequence is: emergency fund first, employer match second, then choose between accelerating the mortgage and other goals. The 30-year plus voluntary overpayments is the default, because it keeps the option open in both directions.
For households with a large, stable income surplus and everything else already covered, the 15-year’s lower rate is free money and the discipline is welcome.
None of this reflects your actual quote, though. Credit score, deposit and lender move the number in ways these averages can’t show, and what actually drives the rate you’re offered is worth reading before you lock anything in, with the mortgage guide nearby for anything that still feels unfamiliar.