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- A 40-year mortgage spreads your payments out over 40 years, giving you a lower, more affordable monthly payment.
- These mortgages can be costly over the long term, as you'll pay much more in interest compared to a 30-year mortgage.
- Few lenders offer these loans. To find one, look to mortgage brokers, non-QM lenders, local banks, or credit unions.
For decades, the 30-year fixed-rate mortgage has been the mortgage industry's bread and butter. A 30-year loan gives buyers the opportunity to take on comfortably low monthly payments while still having the ability to build up equity over time.
But as both home prices and mortgage rates have shot up, hopeful homebuyers are increasingly developing an appetite for longer term, riskier loans that can help them get their foot in the door of homeownership (literally).
A 40-year mortgage can make homeownership more affordable in the short term, but getting one can be difficult and ultimately expensive.
Can you get a 40-year mortgage?
Yes, it's possible to get a 40-year mortgage, but these types of loans are still relatively uncommon. That's because they're considered riskier than traditional types of mortgages, so there's less of a demand for these loans from investors. This means that it's less profitable for mortgage lenders to offer them.
"Right now, a borrower can only get a non-QM 40-year mortgage in the US," says Steve Hill, a mortgage broker with SBC Lending.
Non-QM loans, or non-qualified mortgages, are mortgages that don't meet the Consumer Financial Protection Bureau's definition of a qualified mortgage. Qualified mortgages have features that make them easier for borrowers to afford. One requirement for qualified mortgages is that they can't have loan terms longer than 30 years.
40-year mortgage pros and cons
With a 40-year mortgage, your loan will be set up so that after 40 years of making regular monthly payments, you'll have paid it off.
The main benefit of this is that you'll have lower monthly payments, since you're spreading out the loan amount over a larger period of time. The longer term can also boost your buying power and give you a larger budget to work with when shopping for a home, since you'll have a lower mortgage payment than you would with a 30-year loan.
Depending on your lender's offerings, a 40-year mortgage could also come with features, like an interest-only period, that give you some flexibility in your monthly budget.
However, the flip side of this flexibility is that these features can often be risky. Watch out for things like balloon payments, which require a large lump sum payment at the end of the loan, or negative amortization, which allows your loan balance to increase over time. This happens when your payments aren't high enough to cover the interest.
Because these mortgages are often risky and are spread out over such a long period of time, they also typically come with higher interest rates.
Even without a higher interest rate, you'll still pay more in interest than you would on a 30-year mortgage because you're paying back the loan for longer. You also won't build equity as quickly.
Hill says that 40-year mortgages currently aren't a great deal for borrowers.
"Early 2022, there were some great 40-year programs, but not so much since around June of 2022," he says. "Rates are higher, non-QM mortgages aren't as desirable on Wall Street, and a 40-year isn't as attractive. But that could change in the future."
Pros
- Lower monthly payments
- Larger homebuying budget
- Flexibility
Cons
- Pay more in interest
- Riskier features
- Slow to build equity
- Higher rates
What lenders offer a 40-year mortgage?
Most of the big players in the mortgage lending space, like Rocket Mortgage or Chase, don't offer these types of mortgages. You'll want to reach out to non-QM lenders to find out if they offer any 40-year mortgage products. Popular non-QM lender Newrez, for example, launched an interest-only 40-year mortgage product in 2022.
You may have an easier time getting a 40-year mortgage by working with a mortgage broker. A broker can match you up with loans from a variety of lenders, meaning they'll do the hard work of finding lenders that meet your needs.
It could also be worth checking with a local bank or a credit union to see if they offer mortgages with longer terms.
30-year vs. 40-year mortgage example
Let's say you're getting a $300,000 mortgage with a 30-year term and a 6% interest rate.
On this loan, you'll pay $1,799 each month in principal and interest. Over 30 years, you'll ultimately pay $347,515 in interest.
With the same loan amount and interest rate on a 40-year mortgage, you'd pay $1,651 per month — nearly $150 cheaper each month than the 30-year loan. However, over those 40 years, you'll end up paying almost $145,000 more in interest.
Keep in mind, too, that you'd likely have a higher rate on a 40-year mortgage, which would increase your monthly payment amount.
Whether a 40-year mortgage is worth it depends on how long you plan on staying in your home. If you sell the home after five years or so, the difference between a 30-year mortgage and a 40-year mortgage in terms of interest paid isn't as stark.
40-year mortgage calculator
You can use any online mortgage calculator — including Insider's free mortgage calculator — to see how much you'll pay monthly and overall depending on your loan amount, term length, and interest rate. Use the calculator to run your own numbers and see how much a 40-year mortgage would cost overall compared to a standard 30-year mortgage.
40-year FHA mortgage
You may have recently seen people in the news talking about a new US Department of Housing and Urban Development rule that allows for 40-year FHA mortgages. But some have misunderstood who exactly these loans are for.
To clarify: if you're purchasing or refinancing a home, FHA mortgage lenders can't offer loan terms longer than 30 years.
"I've seen a lot of confusion about this new rule — FHA will not be offering 40-year mortgages for someone trying to buy a home or refinance," Hill says. "And actually, they can't. The Dodd-Frank Act was passed by Congress in 2010 and separated mortgages into qualified mortgages and non-qualified mortgage. Forty-year mortgages are considered risky, and only allowed in the non-QM space."
This new rule, adopted by HUD, enables FHA lenders to offer loan modifications that extend a borrower's term to 40 years. This change is meant to help distressed homeowners who can't afford their mortgage payments avoid foreclosure.
The rule goes into effect May 8, 2023. This type of loan modification is already available on conventional mortgages backed by Fannie Mae and Freddie Mac.
For now at least, borrowers who aren't trying to modify an existing mortgage won't have access to 40-year mortgage terms unless they work with a non-QM lender.
But could 40-year mortgages become mainstream at some point? It's possible, and Hill says it could help more people become homeowners.
"For the larger issue of whether Congress should approve 40-year mortgages for conventional or FHA loans, personally I think it could help with affordability nationwide," Hill says. "Yes, you pay more interest in the long run, but you can pay down the loan faster to avoid that, and too many people are getting locked out from being homeowners."
40-year mortgage frequently asked questions
What are the downsides to 40-year mortgages?
The main downside of a 40-year mortgage is that you'll pay a lot more in interest over the life of the loan. You may also have a higher mortgage rate and have to contend with riskier features, such as interest-only periods or balloon payments.
What are the interest rates on 40-year mortgages?
Because few lenders offer these types of mortgages — and those that do typically don't publish their rates online — it's difficult to get a sense of what average rates are like on a 40-year mortgage. However, you can generally expect that a 40-year mortgage would have rates that are slightly higher than 30-year mortgage rates.
Is there a 50-year mortgage?
While there are no rules stopping a private lender from offering a 50-year mortgage, the likelihood that you'll be able to find one that does is extremely low.