Choosing between a 15-year and 30-year mortgage is one of the most consequential decisions you make when buying or refinancing a home. The term you choose affects your monthly payment, total interest cost, how fast you build equity, and how much financial flexibility you have each month.

The Payment Difference

On a $350,000 loan at 6.5% (30-year) vs. 6.0% (15-year), the 30-year payment is roughly $2,212 per month, while the 15-year payment is about $2,954. That is $742 more per month for the shorter term.

The Interest Savings

Over the full life of those loans, the 30-year costs about $446,000 in total interest. The 15-year costs about $182,000. That is a difference of $264,000, which is not a rounding error. It is a house.

Equity Buildup

A 15-year loan builds equity much faster because more of each payment goes to principal from the start. After five years, you will have paid down roughly 28% of the principal on a 15-year loan versus about 8% on a 30-year loan.

The Flexibility Argument

The 30-year loan requires a lower payment, giving you more room in your monthly budget. You can always pay extra when you have it, effectively shortening your term without being locked into the higher payment. This flexibility is valuable if your income varies or if you want to invest the difference elsewhere.

A Middle Path

Some borrowers take a 30-year loan and make payments as if it were a 20-year or even an 18-year loan. This gives them the safety of the lower required payment while capturing most of the interest savings of a shorter term. If finances get tight, they can drop back to the minimum payment without penalty.

There is no universally correct answer. The right term depends on your income stability, your other financial goals, and how long you plan to stay in the home. The best approach is to see both options side by side with real numbers.