Is Donald Trump proposing a 50-year mortgage? What to know about long-term loans

President Donald Trump on Saturday, Nov. 9, appeared to propose mortgages with 50-year terms, an idea that drew criticism from leaders in Washington, researchers and others.

“Thanks to President Trump, we are indeed working on The 50 year Mortgage - a complete game changer,” Federal Housing Finance Agency Director Bill Pulte wrote on X.

But other Trump allies balked at the idea. Conservative Rep. Marjorie Taylor Greene shared on X that she opposes the move, arguing that it rewards "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."

While the idea of extending mortgage terms may initially seem appealing, it has a few serious drawbacks. Perhaps the most daunting is that legislation passed after the 2008 financial crisis explicitly limits most regulated mortgages to a term of 30 years at the maximum. But there are other reasons why a longer term may not make sense.

Interest rates go up on longer-term loans

Yes, extending the term of a mortgage from 30 to 50 years could drop the monthly payment, wrote Richard Green, a professor at the University of Southern California, on LinkedIn. A 50-year amortization would cost $564 per $100,000 of mortgage versus $632 for the same amount for a 30-year loan, Green calculated.

For a $500,000 mortgage, in other words, the monthly payment would be roughly $340 cheaper.

But that doesn’t account for the fact that longer loan terms naturally have higher interest rates because they’re riskier for lenders. That’s already clear, Green wrote, in the difference between 15-year mortgage rates and those for 30-year loans.William Pulte, President Donald Trump's pick for Director of the Federal Housing Finance Agency, at his nomination hearing in February, 2025

Longer loan terms build less equity

When homeowners make monthly mortgage payments, a portion of the payment goes to cover interest costs, and a portion accrues as equity – the owner’s stake in the property. The longer the term of the loan, the less equity gets accrued.

We already have real-life evidence of why it's so important to have equity in a home, thanks the subprime bubble and bust in the 2000s. When home prices dropped, millions of Americans became “underwater” on their loans, meaning that they owed more to a lender than their homes were worth, and they had "negative equity."

Extensive research from that period has shown that while most Americans do try very hard to stay in their homes, they are far more likely to default on their mortgage or walk away from it altogether if they are underwater.

“Underwater homeowners are 150% to 200% more likely to default on their mortgages than those with positive equity,” noted this 2016 academic paper from Colorado State University and Monmouth University researchers.

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The St. Louis Fed explained the idea this way in 2014: “Negative equity is a necessary condition for default. Otherwise, households would sell their houses, pay back their mortgages and keep any remaining funds.”

What is the real reason housing is expensive?

Perhaps the most important reason not to champion a 50-year mortgage is that it wouldn’t actually make housing cheaper. There’s near-universal agreement from all kinds of housing observers that the affordability crisis is one of (non)-supply and demand.

More: Why is housing so expensive? There simply aren't enough homes.

Construction fell off a cliff after the housing bubble burst over a decade ago and never really recovered. After years of underbuilding, most estimates suggest the United States needs literally millions more homes. Until there's more housing available, in other words – for renters, young buyers, seniors, and everyone in between – the crisis won't let up.

This article originally appeared on USA TODAY: Will Trump back 50-year mortgages? What to know about the loans

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