President Donald Trump over the weekend floated an idea that took real estate agents, mortgage brokers and housing experts by surprise: the 50-year mortgage.
On Saturday, Trump posted an image on Truth Social titled “Great American Presidents.” It included a photo of President Franklin D. Roosevelt under the words “30-year mortgage” and a photo of Trump beneath the words “50-year mortgage.” (Mortgages were extended to 30 years in the 1940s as part of Roosevelt’s push to make home buying more affordable.)
President Donald Trump over the weekend floated an idea that took real estate agents, mortgage brokers and housing experts by surprise: the 50-year mortgage.
On Saturday, Trump posted an image on Truth Social titled “Great American Presidents.” It included a photo of President Franklin D. Roosevelt under the words “30-year mortgage” and a photo of Trump beneath the words “50-year mortgage.” (Mortgages were extended to 30 years in the 1940s as part of Roosevelt’s push to make home buying more affordable.)
Housing economists say the longer time frame could save buyers a couple hundred dollars a month, depending on the size of the mortgage and other details. But it would be costlier in other ways, including with more interest paid over a longer period of time. Implementing such a policy would also require tedious changes from regulators, plus buy-in from lenders and the broader housing finance industry.
So far, there’s little sense of how popular a 50-year mortgage would be.
Here’s what we know so far.
After Trump’s Truth Social post on Saturday, Bill Pulte, the administration’s top housing finance official, posted on X that “we are indeed working on The 50 year Mortgage – a complete game changer.” Pulte is the head of the Federal Housing Finance Agency who also made himself chair of mortgage behemoths Fannie Mae and Freddie Mac, companies that have been under government control since the 2008 housing crisis. Fannie and Freddie are essential to the smooth functioning of the U.S. mortgage market and together guarantee about half of existing home loans.
In a statement, a White House official who declined to be named said Trump “is always exploring new ways to improve housing affordability for everyday Americans. Any official policy changes will be announced by the White House.”
An FHFA spokesperson who also declined to be named said, “We are studying, and have not finalized, a wide variety of options related to multi year loans, including the ability to make mortgages transferable or portable. If banks can sell someone’s mortgage, we should at least explore if there are opportunities for regular Americans to have flexibility.”
One person close to the White House said the announcement came after Democrats swept in last week’s elections, in part on pledges to boost affordability for housing and more. But that person, speaking on the condition of anonymity because they were not authorized to discuss it publicly, said Trump’s social media post had no substantial policy behind it yet.
With a longer timeline, home buyers have much more time to pay back a loan. And they would have lower monthly payments along the way. For example, let’s assume a home sells for $400,000. A buyer puts up 10 percent — or $40,000 — for a down payment. The buyer gets a 6.25 percent interest rate, slightly above last week’s 30-year fixed rate average of 6.22 percent.
That buyer would owe about $2,300 each month on a 30-year mortgage. On a 50-year loan, they would owe about $2,000. They might pay more than that, though — that math assumes a buyer gets the same rate for both mortgages, which is unlikely, since shorter loans typically have lower rates. So rates on 50-year loans could be higher than on 30-year ones.
A lower monthly payment could be beneficial for new buyers looking to get a foothold in the market. But it might also work against them if they are only planning on living in the house for a few years, or if they don’t know how their needs will shake out across decades.
Buyers’ monthly payments may be lower, but they’ll end up paying much more interest over two more decades. With a 50-year loan, total interest on that $400,000 home would amount to $816,396, compared with $438,156 on a 30-year loan. That’s 86 percent more interest over the life of the loans, said Joel Berner, senior economist at Realtor.com.
And it will take much longer for owners to build equity. Ten years into paying off a 30-year mortgage on that $400,000 home, an owner would have a 24 percent stake in a house, setting aside rising home values. With a 50-year mortgage, that would be 14 percent.
Berner said addressing the nation’s affordability problems will take lots of ideas, including how to generate more construction so there are enough homes to meet Americans’ needs.
But a new mortgage offering could juice demand before supply can catch up — which would push prices even higher.
“This is a creative way to solve this problem,” Berner said, “but I don’t think it addresses the fundamental issues that we have.”
Establishing a new kind of mortgage could be possible, albeit complex, wrote Jaret Seiberg, managing director at TD Cowen, in a Monday analyst note. The Dodd-Frank Act — the landmark legislation that reformed the financial system after the 2008 financial crisis — says mortgages that exceed 30 years do not meet the definition of a qualified mortgage, which also means Fannie and Freddie can’t buy them.
But regulators have the ability to alter those qualifications to keep mortgages affordable. All told, the process could take at least a year to implement, Seiberg wrote, and it’s unlikely that lenders would originate 50-year mortgages without clear policy changes first.
Without changing the qualifications, the new loans could be hard to find — and more expensive. Lenders may be less willing to offer 50-year mortgages if they know Fannie and Freddie can’t buy them, a spokesperson for the Mortgage Bankers Association said in a statement. Limited interest from investors could also push interest rates up.
Any details from the White House or FHFA would be needed for the market to prepare for such a change. Joe Brusuelas, chief economist at RSM, said that for now, the administration’s posts appear to be more about messaging than substantial policy. But, Brusuelas said, younger generations “may look at this differently.”
“If they think they’re saving $300 or $400 a month, then that’s a big deal,” he said. “That covers the car payment, maybe.”
The post Could a 50-year mortgage mean savings for home buyers?
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