How a 50-Year Mortgage Would Differ From a 30-Year Mortgage

A proposed 50-year mortgage could lower monthly payments, but buyers would pay far more interest over time and build equity far more slowly.

The Trump administration is considering the idea of introducing a 50-year fixed-rate mortgage as a way to make housing more affordable. But stretching a loan over five decades introduces tradeoffs that aren’t obvious at first glance.

Redfin Head of Economics Research Chen Zhao says a 50-year loan can reduce the monthly payment compared with a 30-year loan—but the amount saved depends entirely on how different the mortgage rate is. 

“We shouldn’t expect the interest rate for a 50-year loan to be the same as a 30-year loan,” Zhao said. “The longer the term, the more uncertainty there is, so lenders would likely need to charge higher rates. But there are few examples of bonds with  this kind of duration so it’s hard to know ahead of time how much higher a 50-year mortgage rate would be.”

Monthly payments on a 50-year-mortgage could be slightly lower than a 30-year-mortgage

As a baseline for comparison, we can look at the expected monthly mortgage payments for a $500,000 home, where a buyer used a 20% down payment. 

While it is impossible to predict what the difference in mortgage rates would be, we use a 6.2% rate for the 30-year-mortgage and a 6.7% rate for the 50-year-mortgage. That 50 basis point difference is similar to the current gap between 15-year and 30-year mortgage rates.

Under this scenario, a borrower would save $135 per month under the 50-year-mortgage.

It’s worth noting that in the unlikely situation that 30-year and 50-year mortgage rates were identical at 6.2%, a borrower would save $285 a month under the longer loan.

But Zhao says even if a 50-year loan made payments slightly smaller, it could also raise home prices, potentially offsetting any benefit.

“Whatever savings there are could be quickly erased because this would spur demand and push home prices higher,” Zhao said. “This dynamic mirrors what happens when mortgage rates fall: lower payments means more demand, which leads to higher home prices.”

50-year borrowers would pay more than double the amount of interest

The first tradeoff to consider for a potentially lower monthly payment under a 50-year mortgage is the amount of interest paid over the lifetime of a loan.

Using the same hypothetical scenario as above, a borrower would pay more than double the amount in interest over the lifetime of a 50-year-mortgage, in comparison to a 30-year-mortgage. That’s over half a million dollars in additional interest, despite the 50-year loan having a slightly lower monthly payment.

“A 50-year loan dramatically increases the amount of interest a borrower pays, even if the monthly payment is lower,” Zhao said. “Because so much of the early payment goes to interest, and because the repayment period is nearly twice as long, the total interest cost ends up more than doubling.”

Borrowers would build equity much more slowly under a 50-year mortgage

The second tradeoff to consider when looking at 50-year loans is how much equity borrowers build throughout the life cycle of a loan.

Mortgages are amortized so that the interest you owe each month is based on how much principal you still have left. Early in the loan, when the balance is high, most of your payment goes toward interest rather than actually paying down what you owe. 

Extending the term to 50 years magnifies that effect: the principal balance shrinks much more slowly, so borrowers spend far longer in the interest-heavy phase before their monthly payments start meaningfully building equity.

For example, using our same example as above for comparison, a borrower with a 30-year mortgage (6.2%) would have built $162,779 in equity after 10 years, while a borrower using a 50-year mortgage (6.7%) would have built $113,801. That’s only $13,801 more than the original $100,000 they put in as a down payment.

“Most people don’t stay in a mortgage for 50 years,” Zhao said. “If they move or refinance in less than 10 years, they’ll have built very little equity in a 50-year loan. That’s especially risky for borrowers making small down payments.”