Would a 50-year mortgage make homeownership more affordable? The Trump administration is working on a plan for a mortgage term that spans five decades, Federal Housing Finance Agency Director Bill Pulte confirmed this weekend, calling it “a complete game changer” and a “potential weapon in a WIDE arsenal of solutions that we are developing right now.”
Details are still sparse, but a 50-year loan could meaningfully reshape a housing market where 30 years is the norm. Experts say homebuyers who opt for the longer loan would see lower monthly payments but a dramatic increase in the total cost of the loan.
“Borrowers might be able to pay less monthly principal and interest, since the loan would be spread out over half a century,” said NerdWallet lending expert Kate Wood in an email. “But the total interest paid over the life of the loan would be staggering, since even with a low rate, you’re looking at 50 years’ worth of interest.”
Take a homeowner who wants to buy a $400,000 home with a 10% down payment, requiring a $360,000 loan.
In reality, rates on 50-year mortgages would probably run higher than 30-year loans, meaning those monthly savings could shrink even further, he added.
Yet total interest on that same 50-year loan would accrue to about $816,000, almost double the $438,000 in interest paid over a 30-year term, he calculated.
At the same time, buyers with a 50-year mortgage would build equity far more slowly than those with shorter loans, Wood noted. That’s because a larger share of early payments goes toward interest, leaving less to chip away at the principal.
“Paying down the loan over so much time could also mean building equity at an incredibly slow pace,” she said.
The Federal Housing Finance Agency said it is “evaluating all options to address housing affordability,” including making mortgages assumable or portable. A White House official added that “President Trump is always exploring new ways to improve housing affordability for everyday Americans.”
The proposal aims to spur housing demand at a time when many Americans are priced out of the market by high mortgage rates and soaring home values, Berner noted.
The typical homeowner now spends 39% of their income on housing, well above the 30% affordability threshold recommended by financial experts, according to Redfin.
Mortgage rates have eased this year but remain above 6%, more than double the pandemic-era lows. Meanwhile, home prices, though slightly down from their peak, averaged $410,800 in the second quarter, about 25% higher than in early 2020, according to data from the Federal Reserve Bank of St. Louis.
While 15-year mortgages are also available, most homebuyers opt for 30-year loans because the terms allow them to spread out payments over a longer timeframe, lowering monthly costs, according to the personal finance website Bankrate.
Mr. Trump defended the 50-year mortgage in a Fox News interview on Monday after host Laura Ingraham questioned the president over criticisms of the plan. Ingraham noted that some in his MAGA base argue the proposal would benefit banks while making it take longer for Americans to fully own their homes.
“It’s not even a big deal,” Mr. Trump said in response. “You go from 40 to 50 years, and what it means is you pay something less.”
What about the interest rate on a 50-year loan?
A half-century mortgage would give Americans an even longer window to pay back their loan, but experts say the monthly savings would be relatively modest because interest rates for 50-year loans would likely be higher than for 30-year terms.
That’s because lenders view longer time frames as carrying higher risks of default, notes NerdWallet’s Wood. Likewise, rates for 15-year mortgages are generally lower than for 30-year loans because lenders view the shorter timeframe as less risky.
The typical 15-year loan today has an interest rate of about 5.6%, according to Bankrate, versus about 6.25% for the 30-year loan.
Extending loan terms could lift buyer demand, but that might push home prices even higher unless more housing is built, Berner added — erasing any benefit from lower monthly payments.
“This is not the best way to solve housing affordability,” Berner said.
