Most people who take out mortgages go with a 30-year term. But President Trump wants the federal government to back a 50-year mortgage option for homebuyers — a plan that would be "a complete game changer," according to Federal Housing Finance Agency Director Bill Pulte.
Backers of the idea say it could help more prospective buyers get into a home they might not otherwise afford. But skepticism abounds, with Fox News' Laura Ingraham telling Trump this week that the proposal "has enraged your MAGA friends."
Ingraham cited "significant MAGA backlash, calling it a giveaway to the banks and simply prolonging the time it would take for Americans to own a home outright."
Trump said the criticism is overblown: "All it means is you pay less per month, you pay it over a longer period of time. It's not like a big factor. It might help a little bit."
The proposal is being floated at a time when many are struggling to get a foothold in the housing market. The pace of home sales has slowed, as potential buyers navigate two main obstacles: mortgage interest rates spiked in recent years, and home prices continue to rise in many areas.
The new plan would also expose borrowers to debt for 20 additional years compared to a 30-year mortgage. And because standard repayment schedules devote far more money to paying interest in the early years of a loan rather than paying down the principal, it would take home buyers even longer to build equity in their property.
"You're going to be paying almost all interest for the first 10 years. It's really akin to an interest-only loan at that point," says Chris Hendrix, senior vice president for the home loans unit of NBKC Bank in Kansas City. He adds, "that's true for a 30-year loan too: for the first 10 years, you're paying mostly interest on that loan. But it would look even worse on a 50-year loan for sure."
Many questions remain about the plan, which the Trump administration revealed over the weekend.
How do the numbers look on a 50-year versus 30-year mortgage?
Using a $400,000 home with a 6.25% interest rate and a 10% down payment as an example, Realtor.com senior economist Joel Berner said via email, "a 50-year loan would save at most about $250 per month compared to the 30-year loan."
That would help buyers in the short term — but over decades, buyers would end up paying much more.
"Total interest on the 50-year loan would amount to $816,396 compared to $438,156 on the 30-year loan, a difference of $378,240," he says. "That's 86% more interest over the life of the loans."
Berner cautions that his hypothetical example assumes the same interest rate for both loans. In reality, he says, the interest rate for a 50-year loan would be higher than one for 30 years, making the disparity even more pronounced. "The longer the life of the loan, the more compensation the lender will demand."
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Why would a bank want to offer a 50-year mortgage, and why would a buyer want one?
"Buyers do benefit from spreading out the high cost of a home purchase over a longer period," Berner says, "but lenders certainly benefit too by having a longer period to charge higher interest rates."
Bruce Marks, the CEO of the Neighborhood Assistance Corporation of America, a nonprofit that helps people get low-cost mortgages, is skeptical that home buyers will embrace the plan.
"It will have no legs because they've tried to do a 40-year term that has not taken off," he says, referring to 40-year mortgage modifications that have been offered in earlier attempts to help struggling homeowners.
The 50-year proposal "is even worse," Marks says. "It will go nowhere. Borrowers will not do it. They see through that. They will know that they will not generate any wealth."
The potential timing of a 50-year mortgage is uncertain.
"There's a lot of legal analysis" over the proposal, National Economic Council director Kevin Hassett said this week, as he implied the plan might require legislation. Under the Dodd-Frank Act, mortgages longer than 30 years don't meet the criteria for qualified mortgages — meaning they're ineligible to get the backing of Fannie Mae and Freddie Mac, and lenders would be hesitant to offer them.
In response to criticisms of the plan, Hassett said homeowners also build equity when their properties appreciate in value. Noting that prices tend to increase, he added, "I don't think that the absence of equity is a serious concern about this."
Could other changes help ease the housing crunch?
"This is not the best way to solve housing affordability," Berner says. "The administration would do better to reverse tariff-induced inflation, which is keeping the rates on existing mortgages high, and to encourage the expansion of housing supply by promoting homebuilding."
Hendrix says he understands the White House's motivation: to address a housing crisis.
"The median homebuyer right now in the nation is 59 years old. It is the highest that it's ever been since we started tracking it since 1981. What else is staggering is the median age for a first-time homebuyer is 40 years old right now. You're looking at a generation that has not had the ability to get into a property, start building equity, start building wealth from a home."
Lower interest rates could help, Hendrix says. But he adds that the government also has other tools, such as helping first-time homebuyers and encouraging housing construction.
One change Marks would like to see is any move that might limit individual homebuyers from being outbid by large corporations that add homes as part of their investment portfolios. Another, he says, is any policy that might support buyers secure mortgages of 30 years or less.
"The 30-year term has always been the sweet spot in this country. And that sets us apart from every other country. And we should not just try to eliminate that or undermine that. We should double down," he says, and find ways to give consumers more flexibility and financial well-being.
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