I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. I’m known as a creative mortgage broker: when a bank says no, I find the lender and the loan structure that can say yes. Call (800) 239-1103.
A 15-year mortgage has a lower rate and saves a very large amount of interest, but the payment is much higher. A 30-year keeps the required payment low and lets you prepay when you choose. Most California buyers take the 30-year because of home prices; buyers near retirement with strong income often prefer the 15-year.
The Core Trade-Off: Payment vs. Total Cost
A 30-year loan spreads repayment over 360 months, so the required payment is lower. A 15-year loan repays in 180 months, so the payment is higher — but lenders price shorter terms lower, and you pay interest for half as long. The result is a big difference in lifetime interest.
Real Numbers: $700,000 Loan
This example uses rates close to Freddie Mac’s national survey averages in late September 2026 (30-year about 7.0%, 15-year about 6.4%). Your rate depends on credit, down payment, loan size, and the day you lock, so treat this as an illustration.
| 30-Year Fixed | 15-Year Fixed | |
|---|---|---|
| Rate (illustrative) | 7.000% | 6.375% |
| Monthly principal & interest | $4,657 | $6,050 |
| Total interest over the full term | about $976,600 | about $389,000 |
| Interest saved | — | about $587,600 |
| Payment difference | — | about $1,393 more per month |
Those savings are real, but they assume you keep the loan for its full term. Most Californians sell or refinance long before year 30, so the realized difference is usually smaller — though the 15-year still builds equity much faster from day one.
The Case for a 30-Year Mortgage
- Lower required payment — more room for savings, retirement contributions, childcare, or a cushion for emergencies.
- Easier to qualify. Lenders qualify you on the required payment. A lower payment means a lower debt-to-income ratio, which matters at California prices.
- Flexibility. You can prepay any time and fall back to the minimum when money is tight. A 15-year locks in the higher payment.
- Investment properties. Investors usually prioritize monthly cash flow and liquidity over faster payoff, so the 30-year (or a DSCR loan) is the common choice.
The Case for a 15-Year Mortgage
- Lower rate. Fifteen-year rates typically run roughly half a point to three-quarters of a point below 30-year rates; the spread changes with the market.
- Much less total interest and much faster equity growth.
- Retirement timing. If you’re 50 and buying, a 15-year means you can be mortgage-free at 65 instead of paying into your 80s.
- Built-in discipline. The higher payment forces savings in the form of principal.
The Middle Path: 30-Year Loan Plus Extra Payments
Many clients take the 30-year and prepay principal. You don’t get the 15-year’s lower rate, but you keep the option to stop prepaying. On the same $700,000 loan at 7.0%:
- $500 extra per month pays it off in about 22½ years and saves roughly $285,000 in interest.
- $1,000 extra per month pays it off in a little over 18 years and saves roughly $432,000.
- Paying the 15-year payment amount on the 30-year loan pays it off in about 16 years — close to the 15-year result, minus the rate advantage.
Before prepaying, make sure you have emergency reserves and are capturing any employer retirement match. Extra principal lowers what you owe but doesn’t lower your required monthly payment on a fixed-rate loan unless the servicer re-amortizes (recasts) it.
Other Terms Worth Considering
- 20- or 25-year fixed: a compromise on payment and interest.
- 10-year fixed: for borrowers with large incomes or smaller balances who want a fast payoff.
- Jumbo loans: above the 2026 conforming limit ($832,750 baseline, up to $1,249,125 in high-cost counties like Marin and San Francisco), jumbo lenders also offer 15- and 30-year terms, but the pricing spread between terms can differ from conforming loans.
- Adjustable-rate mortgages: if you expect to sell or refinance within 5–10 years, compare with an ARM.
Which Should You Choose?
Lean 15-year if the higher payment still leaves comfortable room in your budget and reserves, you want to be debt-free by a specific date such as retirement, or you’re buying below your maximum approval.
Lean 30-year if you’re buying in a high-cost market, your income is variable (self-employed, commission, RSUs), you have other high-priority uses for cash, or you want the option to prepay without the obligation.
I run both side by side — plus a 30-year with a planned prepayment — so you can see the payment, qualifying ratio, and interest over the period you actually expect to own the home.
Frequently Asked Questions
Is a 15-year or 30-year mortgage better in California?
It depends on your budget and goals. A 15-year saves a large amount of interest and builds equity faster, but the payment is much higher. A 30-year is easier to qualify for and more flexible, which is why most California buyers choose it. Many take a 30-year and make extra principal payments.
How much do you save with a 15-year mortgage?
On a $700,000 loan at illustrative rates of 7.0% for 30 years and 6.375% for 15 years, the 15-year saves about $587,600 in total interest if both loans run to term. The 15-year payment is about $1,393 more per month.
What is the rate difference between 15- and 30-year mortgages?
Fifteen-year rates typically run about 0.50% to 0.75% below 30-year rates, though the spread changes with the market. In Freddie Mac’s survey for the week of September 24, 2026, the averages were 7.03% for 30-year and 6.42% for 15-year loans.
Can I pay off a 30-year mortgage early?
Yes. Most conventional, FHA, and VA loans today have no prepayment penalty, so you can add extra principal at any time. Adding $500 a month to a $700,000 loan at 7.0% pays it off in about 22½ years and saves roughly $285,000 in interest, while keeping the option to return to the regular payment.
Is a 15-year or 30-year better for an investment property?
Investors usually choose the 30-year because the lower payment improves monthly cash flow and keeps cash available for reserves and future purchases. Talk with your tax advisor about how interest is treated on rental property.
Related Resources
- ARM vs. Fixed-Rate Mortgage
- California Mortgage Rates
- How Much House Can You Afford in California?
- Debt-to-Income Ratio for California Mortgages
- Rate Buydowns in California
- Refinancing in California
- Mortgage Calculator
Official Sources & References
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | In lending since 2000, founded DiVita Home Finance in 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
