It’s silly we’re even discussing this, but here we are. And I likely have colleagues who might strongly disagree with me on this, but that’s okay. It’s still my opinion. And this is a long one. So let’s talk about it.
Before we delve into the specifics of a 50-year mortgage, remember that one of the unique advantages of a mortgage payment is the gradual buydown of principal each month, thereby gaining equity a little at a time. Each month’s payment is split, with some of your payment going largely towards interest in the first several years of your loan, and the remainder going towards principal (for this discussion, we’re leaving taxes and insurance out). Each month gets you a little more equity, sometimes just a few dollars, but there’s a tipping point in your amortization schedule where you’re paying more in principal each month than interest … and that’s where the REAL equity gains begin.
You’ve likely heard that the Trump Administration recently floated the idea of a 50-year mortgage to help housing affordability. Unless you’ve got money just burning a hole in your pocket, it’s a terrible idea. Like, financially crippling, terrible. You know what? Even if you have money burning a hole in your pocket, it’s still a terrible idea. Sure, you’ll save some money on the monthly payment, but in the long run? Good lord, it’s shocking. Whether it was tossed out as a passing remark or as a serious policy under consideration is immaterial; the principal paydown gets extended so far out that you end up paying incredible amounts of interest before ever clawing back some equity. Let’s look at a real-world example:
The median sales price of a home in Christiansburg in October 2025 was $349,900 - we’ll round to $350,000. For our purposes here, we’re going to assume that our fictional buyer has no intention of ever moving after buying this home. Now, as a buyer, you’ve saved for years to be able to put down 20%, or $70,000, for that home, so you get a loan for the remaining amount of $280,000 at 6% for 30 years. You’re thrilled, and your principal and interest payment of $1678.74 is well within your budget. Great! Over the course of that mortgage, the total amount of interest paid would be $324346.93, which is a substantial sum of money. But over that same time period, you’ve (1) paid off the mortgage, and (2) the property will have appreciated - assuming a 2.5% year-over-year inflation rate - to a nominal value of $733,000. You now own a $733,000 asset, free and clear of any liens. But wait - there’s a 50-year mortgage now? Your payment will be even less? Let’s look at that, too, on the same house.
Our purchase price remains $350,000, with a 20% down payment, and we’ll assume a 50-year mortgage can be had at 6%. In this scenario, the monthly payment would be $1473.93, saving you $204.81 each month. $205 a month is certainly not to be taken lightly, so the monthly savings are significant. But over that period, you will have paid $604,360.05 for that same $350,000 house - an increase of 86% in total interest paid over the 30-year mortgage. In year 15 of the 30-year mortgage, you’d gain $7,950 worth of equity. In year 15 of the 50-year mortgage? Just $2,108.
I give no argument to the fact that housing affordability is a major issue across most of the United States, and certainly in the New River Valley, but locking borrowers into a payment term that’s 40% longer, with interest payments almost 90% higher, is financially reckless. I’d also argue that creating a vehicle like this actually increases home prices, as homebuyers stretch their budget just a little bit further due to the offsetting monthly savings.
Now, I haven’t yet seen a lender come out strongly in favor of this idea, but lenders would certainly benefit by being able to collect interest for a presumed 50 years instead of 30, so I have to believe that some will. I also don’t think that the 50-year mortgage will actually materialize, but as with anything put out by an elected administration, we have to assume it is intended policy until proven otherwise. If the median length of time a homeowner stays in their home is ~ 12 years, I see no avenue where that buyer will accept paying an enormous amount of interest while building virtually no equity during the same period.
If our goal is truly affordability - and it should be - there are better ways to partially solve this without pulling things out of thin air and announcing them as fact rather than the sleight of hand they are.
- Incentivizing the use of First-time buyer programs. In Southwest VA, particularly, this could mean lower rates, more forgivable grants, or even reduced mortgage insurance rates that follow the mortgage for a decade or more.
- Making smaller down payments, with larger cash reserves. Cash is king, and you can always make a larger payment towards your mortgage principal later, but it’s hard to build back up a savings account. Sometimes, making a smaller down payment can be more sensible than a larger one.
- Adjustable Rate Mortgages. I hesitate to even mention this one, but I’m not talking about the wild wild west of 2008. Specifically, I mean well-structured 5 or 7-year ARMs for when a buyer is absolutely certain they’ll be moving again within that time frame.
- Rate buydowns. I love this one, because a rate buydown allows you to get a lower monthly payment without having to put down extra money, or stretching a loan beyond what’s necessary.
- Not stretching your budget. This one’s obvious, but just because you can afford a $600,000 house on paper doesn’t mean you need to. Keeping your payment at a comfortable level, that doesn’t stretch you beyond what’s safe, can never steer you wrong.
Logan Mohtashami, a very well-respected real estate analyst for Housing Wire, and someone worth following if you’re interested in this stuff, is quoted in Newsweek:
“I understand that we have housing affordability challenges in America, but subsidizing more demand from 30- to 50-year mortgages is not the policy we want to take now. Housing has to balance itself out through slowing home-price growth and wages increasing—as it has for many decades. To add another subsidization to the market just prevents that healing process from occurring, which also prevents less equity build out as well. So I am not a fan of any increasing in the amortization, the 30-year fixed is perfectly fine as is."
So a 50-year mortgage. Not a likely scenario, but significant enough to discuss. It should be telling when so many throughout housing, economics, and finance all acknowledge that this is a terrible idea. What are your thoughts?
P.S. Speaking of sleight of hand, as my friend Dan Green says, portable mortgages are not a thing. We could all - including our elected officieals - stand to do what he says at the beginning of his post. Debate privately, announce publicly.
