15-Year vs 30-Year Mortgage: Key Differences
Both loan types use the same formula — M = P[r(1+r)^n] / [(1+r)^n − 1] — but with different values of n (180 vs 360 payments) and typically different rates. A 15-year mortgage usually carries a rate 0.5–0.75% lower than a 30-year. For a $300,000 loan: at 6.0% for 15 years the payment is $2,532/month with total interest of $155,683. At 6.5% for 30 years the payment is $1,896/month with total interest of $382,633. The 15-year option costs $636 more per month but saves $226,950 in interest over the life of the loan.