Want to Afford a Home? Here’s Why a 40-Year Mortgage Could Be the Solution

For many Americans, the dream of owning a house feels increasingly out of reach. Home prices have soared, mortgage rates have climbed, and wages haven’t kept up.

As affordability continues to be a challenge, lenders and policymakers are exploring creative ways to help buyers get into homes—including mortgages with longer terms. Enter the 40-year mortgage.

But is an extended loan term a smart solution, or just a trap that keeps you in debt for another decade? Let’s explore how 40-year mortgages work, their pros and cons, and whether they could become a mainstream option in the housing market.

In this article (Skip to...)

• Can you get a 40-year mortgage?
• Pros and cons of a 40-year mortgage
• When a 40-year mortgage makes sense
• The bottom line

Why homeownership feels out of reach for many

The housing market has changed dramatically over the last few decades.

In previous generations, buying a home was considered a natural milestone that could be achieved with a steady job and some financial discipline. Today, the landscape is much different.

• Home prices have skyrocketed: In many major metropolitan areas, home prices have doubled (or more) in just the last decade, leaving many would-be buyers struggling to save for a down payment.
• Mortgage rates have risen: After a long period of historically low interest rates, mortgage rates have climbed significantly, making monthly payments even higher.
• Wage growth hasn’t kept up: While home prices have surged, wage increases have lagged behind. This means that even as people earn more, their purchasing power in the housing market has declined.

To put this in perspective, in the 1980s, a median-income household could afford a median-priced home with about 20-25% of their monthly income. Today, in some markets, that number is closer to 40-50%, making homeownership a far greater financial burden.

For many buyers, the only way to afford a home is by stretching out the loan term—and that’s where 40-year mortgages come into play.

Can you get a 40-year mortgage?

Yes, some lenders offer 40-year mortgages. However, be prepared to spend a little time finding one.

Most traditional lenders do not offer 40-year mortgages because they are not backed by Fannie Mae or Freddie Mac. These two government-sponsored entities play a crucial role in the mortgage industry by purchasing loans from lenders, which helps keep mortgage rates lower and more stable. Because 40-year loans do not qualify for this backing, they are far less common.

Many 40-year loans are used in mortgage modifications for struggling homeowners rather than for new home purchases.

If you’re interested in a 40-year mortgage, your best bet may be to look at:

1. Portfolio lenders: These keep loans on their own books instead of selling them to Fannie Mae or Freddie Mac.
2. Credit unions: Some credit unions may offer extended mortgage terms to their members.
3. Private lenders: Non-traditional mortgage lenders may provide 40-year options but often come with higher interest rates or less favorable terms.

50-year mortgages are even rarer, but they do exist. Some niche lenders have experimented with them, especially in high-cost states like California and New York, where affordability is a growing issue.

In theory, a 50-year mortgage could make homeownership even more affordable on a monthly basis. However, the trade-offs—particularly the massive amount of interest paid over such a long term—are significant.

Pros and cons of a 40-year mortgage

Like any financial tool, a 40-year mortgage has both advantages and drawbacks.

Pros

• The biggest benefit of a 40-year mortgage is that it reduces the monthly payment, making homeownership more affordable for buyers who might otherwise be priced out.
• Since monthly payments are smaller, lenders may be more willing to approve buyers who have tighter budgets.
• Lower monthly payments free up money for other expenses, investments, or savings goals.
• If interest rates drop, homeowners may be able to refinance into a shorter-term loan with better terms.

Cons

• The longer the loan term, the more interest you’ll pay over the life of the loan. This means that while your monthly payments may be lower, you’ll pay tens of thousands (or more) extra in interest compared to a 30-year loan.
• With a longer loan term, more of your early payments go toward interest rather than principal, meaning it takes much longer to build equity in your home.
• Since these loans aren’t backed by Fannie Mae or Freddie Mac, they are harder to find and may come with less favorable terms.
• A 40-year mortgage means staying in debt for four decades. That’s a major commitment that could impact retirement planning and financial security later in life.

When a 40-year mortgage makes sense

A 40-year mortgage isn’t for everyone, but it could make sense in certain situations. Here are a few instances where a longer-term could be a good idea.

• If a 30-year loan is just too expensive, a 40-year mortgage could be the difference between buying and continuing to rent.
• If you’re okay with slower equity accumulation in exchange for homeownership today, a 40-year loan might be worth considering.
• And if you don’t like the idea of a four-decade mortgage term, you may be able to refinance into a shorter-term loan with better terms.

It’s important to remember, however, if you can afford the payments on a 30-year loan, you’ll build equity faster and save thousands in interest over the life of the loan.

Could these mortgages reignite the American dream?

Could 40-year mortgages become the next big thing in housing finance? It’s possible.

Historically, the 30-year mortgage has been the gold standard for home loans when it became popular in the mid-20th century. By spreading payments over a longer period, it allowed millions of Americans to afford homes.

A similar shift could happen with 40-year loans if affordability remains a challenge.

In some countries, longer-term mortgages are already the norm. In the United Kingdom, for example, 35- and 40-year mortgages are common, particularly for first-time buyers. Likewise, Japan has some mortgage terms that extend up to 100 years, allowing homeowners to pass their loans down to their children.

If housing affordability continues to worsen, policy changes could encourage longer mortgages, making them a mainstream option.

Final thoughts for homebuyers

A 40-year mortgage could be a useful tool for buyers struggling with affordability, but it comes with trade-offs. It offers lower monthly payments and easier qualification but at the cost of higher total interest and slower equity growth.

For buyers who seek a way to break into homeownership, it’s worth exploring—especially if refinancing is an option later. But for those who can manage a traditional 30-year loan, sticking with a shorter term will save more money in the long run.