The Trump Administration is moving forward with a proposal to introduce a 50-year fixed-rate mortgage, a reform that officials say would expand access to homeownership for millions of Americans amid growing affordability challenges.
“Thanks to President Trump, we are indeed working on The 50 year Mortgage — a complete game changer,” Federal Housing Finance Agency Director Bill Pulte said Saturday on the social media site X.
His announcement came after Trump shared a photo online comparing his proposal to the 30-year mortgage policies shaped by President Franklin D. Roosevelt during the New Deal.
With the 30-year fixed-mortgage rate stuck above 6% for more than three years, high homeownership costs have sidelined many would-be buyers. According to data from the U.S. Census Bureau’s American Community Survey, the median monthly homeownership costs increased nearly 4% to $2,035 in 2024 from $1,960 (inflation-adjusted) in 2023, which was primarily driven by higher mortgage costs and insurance fees.
Many homeowners are reluctant to sell because of the “lock-in effect,” holding onto historically low mortgage rates they secured before rates rose in 2022. This has created a housing market stalemate, making ownership unattainable for younger buyers and deepening the affordability issue.
Data from the National Association of Realtors shows that the median age of first-time homebuyers has reached 40 — high compared to the late 20s typical in the 1980s.
What a 50-year mortgage could mean in practice
The proposed 50-year mortgage aims to lower monthly payments by stretching out the repayment period well beyond the traditional term.
According to data from Morgan Stanley, 50-year mortgages have lower monthly payments than 30-year mortgages, even at slightly higher rates. For example, at 6.5%, the 50-year payment is $2,819 compared to $3,079 for the 30-year. That's about a $260 difference in a monthly payment.
“If the rate [on a 50-year mortgage] was close to where a 30-year rate is, the monthly payment would be lower, so that’s the benefit,” Jeff DerGurahian, loanDepot’s head economist, told Homes.com in an interview. “It’s a lower monthly payment for the borrower, likely, which helps with affordability.”
While lower monthly payments are an appealing feature, the long-term loan costs tell a different story. Morgan Stanley analysts found that the trade-off is much higher total interest paid over the life of the loan. For the 50-year at 6.5%, you pay $1.19 million in interest, almost double the $608,291 for the 30-year.
Another significant caveat: Longer loan terms typically carry higher interest rates due to increased risk for lenders. This pattern is already evident in the rate differences between 15- and 30-year mortgages.
Longer-term loans build less equity
When homeowners make their monthly mortgage payments, part of each payment covers interest, while the rest builds equity, the owner’s share of the property. But longer loan terms have a significant effect on equity.
“The downside is that you build equity more slowly and you pay much more interest over the life of the loan than you would with a 30 year,” DerGurahian said.
According to Morgan Stanley, with a 50-year mortgage, it takes much longer to build up ownership in your home. For example, with a 30-year loan, you’ll have paid off half of what you owe in about 21 years. But with a 50-year loan at 6.5% interest, it takes almost 40 years to reach that same halfway point.
This slow pace of building equity matters. The risks of having little ownership in your home became painfully clear during the subprime mortgage crisis of the 2000s. As home prices fell, millions of Americans found themselves “underwater,” owing more on their mortgages than their homes were worth, resulting in negative equity.
Research shows that homeowners are much more likely to default or walk away from their mortgages if they owe more than their home is worth. One study from Colorado State University and Monmouth University found that underwater homeowners are 150% to 200% more likely to default than those with positive equity.
As the St. Louis Fed explained, negative equity is a key factor in mortgage default. Without it, most households would simply sell their homes to pay off their loans.
Clifford Rossi, professor at the University of Maryland Smith School of Business, told Homes.com in an interview that a 50-year mortgage currently falls outside the definition of a qualified mortgage under the Dodd-Frank Act, which allows investors to rely on Fannie Mae and Freddie Mac for protection if a loan defaults.
Trump considers assumable and portable mortgages
“We continue to evaluate all options to address housing affordability, including studying how to make mortgages assumable or portable,” a U.S. Federal Housing Finance Agency spokesman said in a statement.
However, Morgan Stanley analysts caution that there are significant hurdles and potential drawbacks to these ideas.
It’s worth noting that some government-backed loans like Veterans Administration and Federal Housing Administration loans are already assumable, which means a new buyer can take over the seller’s mortgage. However, most conventional fixed-rate mortgages don’t offer this option.
Morgan Stanley said that making conventional fixed-rate mortgages assumable or portable could negatively affect mortgage-backed securities — loans that are pooled together and sold to investors — and the portfolios investors of those securities hold. By doing so, the new assumable or portable loans would be riskier and less appealing to investors. As a result, lenders would likely raise interest rates, meaning new homeowners could end up paying more for their mortgages.
Even if these changes were allowed, they probably wouldn’t make homes much more affordable. Buyers would still need to come up with big down payments or take out extra loans, so it’s unclear if this would actually help more people buy homes.
Mortgage proposal sparks criticism
“It does nothing to address the fundamental issue of affordability,” said Rossi. “It really is more about the optics around things like ‘we’re trying to take action’ … when in fact it’s doing nothing to address the fundamental issues … constraints on supply, higher… interest rates, [and] higher building costs.”
U.S. Rep. Marjorie Taylor Greene (R-Ga.) voiced a similar skepticism, arguing that these loans primarily “reward the banks, mortgage lenders and home builders while people pay far more in interest over time and die before they ever pay off their home. In debt forever, in debt for life!”
Buyers have been looking at alternatives in the face of high interest rates and home prices. Adjustable-rate mortgages have grown more popular, which are now making up at least 10% of mortgage applications, the highest share since 2021, according to the Mortgage Bankers Association.
Pulte has criticized Fed Chairman Jerome Powell for acting too slowly on lowering interest rates. “He’s not looking into data," Pulte said last week at a housing conference. "I mean, the data shows very clearly that inflation is way lower.”
He wrote Sunday on X that the administration is “laser focused on ensuring the American Dream for YOUNG PEOPLE and that can only happen on the economic level of homebuying. A 50 Year Mortgage is simply a potential weapon in a WIDE arsenal of solutions that we are developing right now. STAY TUNED!”
A White House spokesperson told Homes.com in a statement: “President Trump is always exploring new ways to improve housing affordability for everyday Americans. Any official policy changes will be announced by the White House.”