Or: Why that 30-year mortgage might be the most expensive “convenience” you’ll ever buy (but also maybe the smartest)

I’ve been thinking about mortgages lately—specifically, how most people don’t really understand what they’re signing up for when they take out a 30-year loan. The math is honestly kind of brutal, and I wanted to work through it properly.

So let’s talk about amortization. Not a very exciting topic, I know, but stick with me.

The Setup

I’m going to compare three mortgage terms (15, 30, and 50 years) across three rate environments: the COVID-era lows we saw in 2020-2021, today’s rates, and the historical average since the 30-year mortgage became widely available in the 1970s.

Rate assumptions:

• Historically low: 2.65% (what people locked in during peak COVID)
• Current: 7.00% (roughly where we are as of late 2025)
• Historical average: 7.75% (the actual average from 1971-2025)

For the 50-year mortgage—which doesn’t really exist in the US market but is available in some countries—I’m extrapolating rates by adding a 0.35-0.50% premium over the 30-year, based on typical yield curve behavior.

Let’s use a $300,000 loan for all examples.

Monthly Payment Comparison – $300k loan

Rate Environment	15-year	30-year	50-year
COVID-Era Lows (2.65%)	$2,018	$1,209	$1,046*
Current Rates (7.00%)	$2,696	$1,996	$1,865**
Historical Average (7.75%)	$2,831	$2,146	$2,032***

*50-year rate: 3.00%
**50-year rate: 7.35%
***50-year rate: 8.10%

The Part Nobody Talks About: Total Interest

Here’s where it gets painful.

At COVID-Era Rates (2.65%)

• 15-year: $63,240 in interest (21% of what you’ll pay)
• 30-year: $135,240 in interest (45% of what you’ll pay)
• 50-year: $327,600 in interest (you pay 109% of the principal in interest alone)

At Today’s Rates (7.00%)

• 15-year: $185,280 in interest (62% of total payments)
• 30-year: $418,560 in interest (140% of the principal)
• 50-year: $819,000 in interest (273% of the principal)

At Historical Average (7.75%)

• 15-year: $209,580 in interest (70% of total payments)
• 30-year: $472,560 in interest (158% of the principal)
• 50-year: $919,200 in interest (306% of the principal)

Read that 30-year number again. At today’s rates, you’re paying $418,560 in interest on a $300,000 loan. You’re buying a $300,000 house for $718,560.

How Amortization Actually Works (The Ugly Truth)

In year one of a $300,000 mortgage at 7.00%:

30-year mortgage:

• Principal paid down: $3,552 (15% of your payments)
• Interest paid: $20,400 (85% of your payments)

15-year mortgage:

• Principal paid down: $11,700 (36% of your payments)
• Interest paid: $20,652 (64% of your payments)

50-year mortgage:

• Principal paid down: $1,626 (7% of your payments)
• Interest paid: $20,754 (93% of your payments)

For the first several years of a 30-year mortgage, you’re essentially renting money from the bank. You’re barely touching the principal.

When does your monthly payment finally split 50/50 between principal and interest?

• 15-year: Around year 6
• 30-year: Around year 20 (two decades!)
• 50-year: Around year 37

Why 2021 Was Actually Insane

If you locked in a 30-year mortgage at 2.65% in 2021 versus taking one out at 7.00% today:

• Your payment is $787/month lower (65% less)
• You’ll pay $283,320 less in interest over the life of the loan
• You’re building equity roughly 3x faster in the early years

People who refinanced during COVID captured what might be once-in-a-lifetime savings. And importantly, today’s 7.00% rate? That’s actually pretty close to the historical norm. The 2-3% rates were the anomaly, not what we’re seeing now.

The 50-Year Mortgage: A Thought Experiment in Bad Ideas

The 50-year mortgage exists in some markets (Japan, parts of Europe), but it’s never caught on in the US. Looking at the numbers, it’s obvious why:

• Even at historically low rates, you pay more in interest than you borrowed
• At current rates, you pay 2.5-3x the loan amount in interest
• The monthly savings versus a 30-year are pretty modest ($131-262/month depending on rates)
• After 10 years on a 50-year mortgage at 7.35%, you’ve only paid off $32,000 of your $300,000 loan (11%)

You’re basically paying rent with a tiny equity kicker.

The 50-year mortgage is predicated entirely on “number go up” thinking—the assumption that housing prices will perpetually appreciate, inflation will always be positive, and you’ll be able to sell or refinance your way out of the hole you’ve dug. You know, the same assumptions that worked out so well in 2008 when people discovered that, shockingly, houses don’t always go up in value and sometimes you end up underwater on a loan that you’ve barely made a dent in after a decade of payments.

And let’s be honest about today’s market: with housing prices at historic highs relative to incomes, interest rates back to normal levels after a decade of artificially suppressed rates, and the possibility of an actual economic correction lurking somewhere out there, betting on 50 years of uninterrupted appreciation and favorable refinancing opportunities seems… optimistic. The “money printer go brrrt” era is over, and the hangover might last a while.

The Inflation Arbitrage: Why 30 Years Might Actually Be Brilliant

Here’s where the analysis gets interesting, and why I titled this post the way I did. The 30-year mortgage has a feature that looks like a bug in the raw numbers: inflation.

That $1,996/month payment you’re making today at 7.00%? In 30 years, assuming historical average inflation of 3% annually, that same payment will feel like $822/month in today’s dollars. By year 15, it’ll effectively feel like $1,240/month. Meanwhile, your income—assuming it keeps pace with inflation—will have grown substantially.

Let’s model this out. Assuming you’re earning $80,000/year when you take out the mortgage:

Year 1:

• Income: $80,000
• Mortgage payment: $23,952/year (30% of gross income)

Year 10 (with 3% annual raises):

• Income: $107,450
• Mortgage payment: $23,952/year (22% of gross income)
• Effective payment in today’s dollars: ~$17,800

Year 20:

• Income: $144,430
• Mortgage payment: $23,952/year (17% of gross income)
• Effective payment in today’s dollars: ~$13,230

Year 30:

• Income: $194,100
• Mortgage payment: $23,952/year (12% of gross income)
• Effective payment in today’s dollars: ~$9,850

Your fixed housing payment becomes a smaller and smaller portion of your budget over time. This is the invisible benefit of the 30-year mortgage that never shows up in amortization tables.

Compare this to the 15-year mortgage at $2,696/month ($32,352/year):

Year 1:

• $32,352/year is 40% of your $80,000 gross income

Year 15:

• Your income has grown to $124,650, but you’ve been carrying a 40%+ housing burden the entire time
• You’re debt-free, which is great, but you’ve had significantly less cash flow flexibility for a decade and a half

The 30-year mortgage essentially lets you borrow against your future, inflation-adjusted earning power. You’re betting that your income will grow (or at minimum, that inflation will erode the real value of the debt) while your payment stays fixed.

The Working Lifetime Consideration

There’s another subtle genius to the 30-year term: it roughly maps to a working lifetime. Take out a mortgage at 35, and you’re paid off at 65—right around retirement age. This isn’t an accident.

The 15-year mortgage requires you to front-load your housing costs during what are often peak earning and spending years. You’re 35-50 years old, potentially dealing with college savings, elder care, career investments, and a thousand other financial demands. The 30-year gives you breathing room during those years and shifts more of the payment burden to your presumably higher-earning later career.

The 50-year mortgage, conversely, extends well beyond most people’s working years, which creates a whole different set of problems around retirement planning and estate considerations.

So What’s the Right Answer?

Here’s where I’m going to be annoyingly equivocal: it depends.

If you can comfortably afford the 15-year payment without sacrificing other financial goals (retirement savings, emergency fund, etc.), you’ll absolutely come out ahead in pure wealth-building terms. That $233,280 difference in interest paid between a 15-year and 30-year at 7.00% is real money that could compound elsewhere.

But the 30-year mortgage is an inflation hedge and a cash flow management tool. It gives you optionality. You can always pay extra toward principal if you want (effectively creating your own 15 or 20-year term), but you can’t call the bank and ask for a lower payment if life throws you a curveball.

And in an inflationary environment—which is the historical norm—that fixed payment becomes increasingly cheap in real terms. You’re essentially shorting the dollar, which has been a winning bet for most of the past century.

What Does This Mean Practically?

Run the numbers for your specific situation:

• What’s your income trajectory look like?
• What other financial goals are you balancing?
• How much job security and income stability do you have?
• What’s your risk tolerance?

The financial services industry has gotten very good at focusing your attention on the monthly payment number while obscuring the total cost. But they’ve also gotten good at obscuring the inflation arbitrage benefit, because explaining it requires more nuance than fits in a lending disclosure.

Don’t let them do all your thinking for you.

Final Thoughts

Mortgages are probably the largest financial transaction most people will ever make, and yet I’d wager most borrowers couldn’t tell you either how much interest they’re paying over the life of the loan OR how inflation will effectively reduce their payment burden over time. Both numbers matter.

The 30-year mortgage isn’t just about stretching out payments—it’s about matching your debt service to a realistic earning timeline and benefiting from the erosion of debt through inflation. It’s a bet that the future will be more expensive (and hopefully, you’ll be earning more), making today’s debt burden progressively lighter.

That’s not a bug. That’s actually pretty clever financial engineering.

Of course, it only works if inflation actually happens and your income keeps pace. If we enter a deflationary period or your income stagnates, those nominal interest costs I showed earlier become very, very real. There’s no free lunch.

But historically? The 30-year mortgage has been a pretty good deal for American homeowners. The math is ugly when you look at total interest paid. The math gets more interesting when you adjust for inflation and realize that your Year 30 payment is effectively pocket change.

Just make sure you understand which math matters for your situation.

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Have thoughts on this? Found an error in my calculations? Think I’m completely wrong about something? Let me know. Always happy to be corrected when I’ve messed up the numbers.