How to use this calculator
- Enter the loan amount and the rates quoted for 15 and 30 years.
- Set the return you could earn by investing the difference.
- Compare interest saved with the money each path has invested after 30 years.
Frequently asked questions
Is a 15-year or 30-year mortgage better?
A 15-year loan builds equity faster and costs far less interest — $312,283 less on a $400,000 loan in the example — but its payment is $793 higher each month. A 30-year loan keeps the payment low and leaves room for other goals.
What if I take 30 years and invest the difference?
It depends on the return. At 6% a year, after 30 years the 15-year path comes out ahead by $179,870. At 9%, the 30-year path is ahead by $132,561. Investing the difference only works if you actually do it every month.
How much does the lower 15-year rate matter?
Quite a lot. If both loans had the same 6.5% rate, the 15-year loan would still save $282,981 in interest — the lower rate in the example adds another $29,302.
Can I get 15-year results with a 30-year loan?
Yes, by making extra principal payments. You keep the flexibility of the lower required payment, but you pay the higher 30-year rate. See the mortgage payoff calculator.