Will 50-Year Mortgages Make Homes More Affordable?

We are currently in a period of high home prices and relatively high mortgage rates. A push to improve housing affordability is gaining momentum. One potential solution being proposed is the 50-year mortgage—a loan term that would stretch payments over five decades. While the idea may seem appealing, the financial tradeoffs are more significant than they appear.

How a 50-Year Mortgage Works

A traditional 30-year mortgage has long been the standard for most American homebuyers. A 50-year mortgage would extend that repayment period by an additional 20 years, reducing monthly payments by spreading them out over a longer timeframe.

For example, on a $400,000 home with a 20% down payment and a 6.22% interest rate, a borrower could save roughly $200 per month in principal and interest payments with a 50-year mortgage compared to a 30-year loan. But that savings comes at a steep cost: over the life of the loan, the homeowner would pay approximately $335,000 more in interest.

These figures assume both loan types carry the same rate. In practice, lenders may charge higher rates for a 50-year mortgage to account for the added risk of a longer-term loan—potentially reducing or eliminating any monthly savings altogether.

Slower Equity, More Risk

One of the biggest drawbacks of a 50-year mortgage is the slower pace of equity accumulation. Because early payments mostly go toward interest, homeowners build equity at a slower pace than with a traditional mortgage.

Extending the term also increases the likelihood that life events—such as job loss, illness, or divorce—could interrupt repayment. And with the average first-time homebuyer now in their early 30s, a 50-year loan could potentially remain outstanding when the homeowners are in their 80s. In some cases, mortgages may even be passed on to heirs rather than paid off in the borrower’s lifetime.

Affordability Isn’t Just a Monthly Payment

While lower monthly payments are the main draw of a 50-year mortgage, they don’t address all the challenges of affordability. Many buyers struggle to come up with a down payment—something this new product doesn’t address.

Worse, if these longer mortgages increase purchasing power without increasing housing supply, they may unintentionally drive up home prices. More demand, without more homes, can push prices even higher—offsetting the benefit of lower payments and creating affordability challenges for others.

Regulatory and Market Uncertainty

At the moment, 50-year mortgages are not allowed for government-backed loans. Fannie Mae and Freddie Mac—the two major buyers of U.S. mortgages—are currently prohibited from purchasing loans longer than 30 years. For a 50-year product to gain wide adoption, Congress would likely need to repeal that restriction, or regulators would have to reinterpret existing rules—both of which would take time.

Private lenders experimented with longer-term loans in the early 2000s, including 40-year mortgages, but they were largely phased out after the 2008 financial crisis. Policymakers and investors remain cautious about reintroducing products that could increase systemic risk.

There are also questions about how these loans would be received by the broader mortgage market. If investors are reluctant to purchase mortgage-backed securities tied to 50-year loans, lenders may be less likely to offer them.

More Flexibility—But Not Without Tradeoffs

Proponents of the plan suggest it could open the door to more flexibility in the mortgage market. For instance, making loans “assumable” or “portable” could allow homeowners to transfer low interest rates from one property to another, or let buyers take over existing loans. While some government-backed loans already allow this, it remains difficult and uncommon in practice.

At LMC, we help clients understand how evolving mortgage trends and policy proposals may impact their financial strategies. While innovations like the 50-year mortgage may offer short-term relief, it’s important to evaluate the long-term costs, risks, and tradeoffs. If you’re considering a home purchase or refinancing, reach out to your LMC advisor to explore the options best suited to your goals.