President Donald J. Trump’s administration recently floated the 50-year mortgage as something that would help make homes more affordable.
This idea, Laura Ingraham told Trump, has “enraged your MAGA friends” with “significant MAGA backlash, calling it a giveaway to the banks and simply prolonging, uh, the, the time it would take for Americans to own a home outright.” She directly asked: “Is that really a good idea?”
Trump downplayed the significance: “It’s not even a big deal. I mean, you know, you go from 40 to 50 years.” When Ingraham interjected that it’s actually from 30 years, Trump explained: “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.”
It, is, actually a big factor. Using the longer mortgage helps a little bit — a very small bit – at a very large cost. It is surprising that an experienced businessman like Trump is not able to see this.
I’ve developed a calculator to illustrate the difference between 30-year and 50-year loans. Click here to use it in your browser.
What is the Difference?
A 50-year mortgage spreads payments over a much longer period, which reduces the monthly payment but dramatically increases the total interest you’ll pay over the life of the loan. The extra 20 years of interest compounding can add hundreds of thousands of dollars to the total cost, even though each monthly payment feels more manageable.
The monthly payment on a 50-year mortgage will be lower, which is the main selling point of extended terms. However, the total interest paid over the life of the loan will be substantially higher – often two to three times the original loan amount for a 50-year term. With the default numbers, you’ll pay about $400,000 more in interest with the 50-year loan despite the more comfortable monthly payment.
The chart shows why this happens: it displays the remaining balance over time for both loans. You’ll notice the 30-year loan’s balance drops relatively quickly after the first decade, while the 50-year loan barely makes a dent in the principal for many years. This slow principal reduction means you’re paying interest on nearly the full amount for much longer.
The amortization tables break down each payment to show how much goes to principal versus interest. In the early years of either loan, most of your payment covers interest rather than reducing what you owe. But with the 50-year term, this period of mostly paying interest stretches much longer – you’ll see that even 10 or 15 years in, you’ve barely reduced the principal balance.
This tool makes it easy to experiment with different scenarios. Try adjusting the loan amount or interest rates to see how sensitive the comparison is to these factors.
Interest Rates for Lengthy Mortgages
The rate for a traditional 30-year mortgage today is around 6.22 percent. What rate should we expect for a 50-year mortgage?
50-year mortgages are extraordinarily rare in the United States. They’re so uncommon that there really isn’t an established market rate for them the way there is for 15-year and 30-year mortgages. Most lenders don’t even offer them because of concerns about the extended risk period and the fact that Fannie Mae and Freddie Mac (the government-sponsored enterprises that buy most mortgages) don’t purchase 50-year loans, which means lenders would have to hold them on their own books.
We do know that lenders charge higher interest rates for longer-term mortgages for several interconnected reasons. Over 50 years instead of 30, the lender faces two decades more of inflation risk – the dollars they get back in years 40-50 will likely be worth substantially less than today’s dollars. They also face more interest rate risk, meaning if rates rise significantly over that period, they’re stuck earning the lower rate they locked in. And perhaps most significantly, there’s default risk spread over a much longer period, with more potential life events that could lead to nonpayment.
Looking at the current spread between 15-year and 30-year mortgages gives us a starting point. Right now, 15-year mortgages typically run about 0.5 to 0.75 percentage points below 30-year rates, which means lenders are charging roughly that much extra for the additional 15 years of risk. But this relationship isn’t perfectly linear – the spread from 30 to 50 years would likely be larger than the spread from 15 to 30 years because you’re extending into a period of much greater uncertainty.
A reasonable estimate would put a 50-year mortgage somewhere between 0.75 and 1.5 percentage points above the 30-year rate. With a 30-year rate at 6.22%, that would suggest a 50-year rate in the range of 7.0% to 7.7%, with 7.25% being a reasonable middle estimate.
The calculator shows what the two loans look like for a $300,000 loan at 6.22 and 7.25 percent interest. In summary,
Monthly Payment Difference: $21.38 less per month with 50-year
Additional Interest (50-year vs 30-year): $454,741.14 more
Interest as % of Loan Amount: 30-year: 121.0%, 50-year: 272.5%
If we could get a 50-year loan at the same interest rate as the 30-year loan, the comparison is more favorable:
Monthly Payment Difference: $213.10 less per month with 50-year
Additional Interest (50-year vs 30-year): $314,054.32 more
Interest as % of Loan Amount: 30-year: 121.0%, 50-year: 225.6%
Perhaps President Trump believes lenders will offer 50-year loans at the same interest rate as for 30-year loans. That is not realistic.
Comparison at Year 30
What would you still owe on the 50-year mortgage when the 30-year is completely paid off?
At year 30, someone with a 30-year mortgage owns their home free and clear, while someone with a 50-year mortgage still faces 20 more years of payments. Further, this person still owes $223,292.
Selling Early
Selling a home before the mortgage is paid is an important real-world consideration that pure amortization schedules miss. A home isn’t just a debt obligation, it’s also an asset that typically appreciates over time. Equity is the portion of your home that you truly own, calculated as the current market value minus what you still owe.
When you’re paying down principal more slowly with a longer mortgage term, you’re building equity more slowly, even as your home appreciates. This matters enormously if life circumstances force you to sell before the mortgage is paid off, whether that’s due to a job relocation, financial hardship, or simply wanting to move to a different home.
The calculator shows this under a few scenarios.