Why a 50-Year Mortgage is a Terrible Idea

If you’re hunting for a home, you might have come across talks of a 50-year mortgage, a home loan stretched over half a century, that’s being considered in the current White House to “address the home affordability crisis.” On the surface, sure, it sounds tempting: Lower monthly payments and more time to pay. But when you go deeper, the trade-offs are huge. Let’s break down why this extended loan term is a terrible idea, how it stacks up against a 30-year mortgage, and what the White House’s recent proposal means for you.

What a 50-Year Mortgage Means

In the U.S., the “standard” home loan is a 30-year fixed-rate mortgage. A 50-year mortgage would extend that term by 20 years. This means:

• You’d make payments for much longer
• You’d build home equity much more slowly
• You’d pay WAY more in total interest

Stretching from 30 to 50 years could DOUBLE your interest bill over time.

Example: 30-Year vs 50-Year

Here’s a real-life style comparison example to show how it can play out. Exact numbers can vary by lender, risk profile, and how long the product’s been on the market, so this is a general example.

Let’s say you’re on $550,000 mortgage

30-Year Mortgage at around 6.0% APR

• Monthly payment: around $3,298
• Total interest paid: $637,110
  

50-Year Mortgage at around 6.75% APR

• Monthly payment: around $3,204
• Total interest paid: $1,372,665

This means…

While you “save” $94/month with a 50-year mortgage, you’d pay an additional ~$735,000 in interest over the life of the loan. That’s more than DOUBLE the interest of the 30-year mortgage, just for a slightly lower monthly payment. Even if you sell or refinance early, you’re still paying way more interest and building a lot less equity. The banks, of course, would LOVE all that extra interest. You can also play around with the numbers with the Mortgage Calculator from Bankrate.

Why It’s a Bad Deal for Most Homebuyers

You build equity at a snail’s pace

With a 50-year term, you’re mostly paying interest for a much longer period. This means your home may increase in value over time, but the portion you actually own builds up much more slowly. 

You might still owe when retiring

If you’re 40 when you buy (which is the average age of first-time home buyers in the U.S. now), then a 50-year payoff means you’ll be 90 when the loan is done. Not ideal if you want to retire with your home paid off.

Interest adds up fast
As the example showed, a few extra decades = hundreds of thousands more in interest. That money could’ve gone toward retirement, travel, starting a business, and more!

It doesn’t fix deeper problems
This lengthy mortgage might look helpful by lowering monthly payments, but it doesn’t solve why housing is so expensive (supply issues, construction costs, regulations, etc).

What Washington is Talking About

The current administration floated the idea of a 50-year mortgage as a possible tool to help younger buyers by making homeownership a little more affordable by spreading payments out over a longer period.

But it’s still just a proposal. Loans backed by major government entities (like Fannie Mae and Freddie Mac) generally cap at 30 years. Changing that will call for significant policy shifts.

Critics also call it a “band-aid” solution. Looks nice on the surface, but doesn’t help if you’re still paying forever and not owning much of your home.

What You Should Do Instead

• Aim for a 30-year or shorter loan if possible. You’ll build equity faster, pay less interest, and likely finish payments faster
• If you feel trapped by high home prices, consider delaying purchase, buying a smaller property, or paying more down to reduce the loan size
• Calculate the numbers to see  if buying a home really makes sense in the area you want to live, vs renting longer and investing the difference 
• If you do get a loan, put extra payments toward the principal if you can, as this shortens the term and cuts interest
• Keep an eye on your interest rate because even a small increase with a longer term multiples the cost
• Watch policy changes. If a 50-year mortgage becomes real and common, lenders may raise interest rates to compensate for the longer risk

The Money Move

A 50-year mortgage sounds like a “fix” for rising home prices with lower monthly payments and more time, but in reality, it’s a longer road to less ownership and much higher interest bills. For most homebuyers, especially millennials, it’s better to find a loan that still gives you control over your timeline, debt, and equity. Think longer-term. You want the homeownership payoff, not just the small payment today. Also, think about whether you really want that house or if you’re going through the motions of what you “should” have by X age.

Read more:

Why More Millennials and Gen Z are Embracing Multigenerational Households

Smart Money Moves for Stay-at-Home Parents: Build Wealth Without Leaving the House