The Core Comparison
15-year vs. 30-year refinance comparison on $400,000 balance, 2025 rates
| Option | Monthly Payment | Total Interest | Interest Rate (est.) | Equity Built in 5 Years |
|---|---|---|---|---|
| $400K, 30-yr @ 6.5% | $2,528 | $510,000 | 6.50% | $33,600 |
| $400K, 15-yr @ 5.9% | $3,348 | $202,500 | 5.90% | $91,000 |
The 15-year saves $307,500 in total interest. The tradeoff: $820/month more per month in required payments. Over 15 years, the 30-year borrower’s $820 monthly difference invested at 7% returns: $261,000 in investment value. The interest savings ($307,500) still wins — but the margin is tighter than the headline number suggests.
15-year refinance rates run 0.5–0.75% lower than 30-year rates in 2025. This rate differential adds to the interest savings beyond just the shorter term. At 6.5% for 30 years vs. 5.9% for 15 years on $400,000: the combination of lower rate and shorter term saves $307,500 in total interest.
When the 30-Year Makes More Sense
Choose 30-year when: income is variable (real estate investors, self-employed, commission workers), other high-rate debt exists, you have significant investment upside (business owner), or you want cash flow flexibility. The 30-year with voluntary extra payments mimics the 15-year when affordable and creates flexibility when needed.
The Best of Both: 30-Year with Extra Payments
Taking a 30-year refinance and making the 15-year payment voluntarily: payoff in 15 years with the same interest savings as a 15-year loan, plus the option to revert to the lower 30-year minimum during financial stress. The risk: discipline. Many people intend to pay extra and don’t.
Comparing Across Income Levels
Income requirements to safely afford 15-year refinance on $400K
| Household Income | Safe 15-Year Payment | Can Afford 15-Year? |
|---|---|---|
| $100,000 | $2,100/mo (25% gross) | No for $400K |
| $130,000 | $2,700/mo | Marginal for $400K |
| $160,000 | $3,333/mo | Yes for $400K |
| $200,000 | $4,167/mo | Comfortably for $400K |
Compare Your 15-Year and 30-Year Options
Get both calculations side by side — monthly payment, total interest, break-even.