Learn whether a 50-year mortgage serves your best interests in the current economy…
As of late, the concept of a 50-year mortgage has been re-introduced into the lexicon in the United States due to the housing and affordability issues that many face. However, is a 50-year mortgage a good choice, or more importantly a good choice for you and your family?
Although the holiday season is upon us all, a 50-year mortgage loan is not a cause for celebration for most, and if you are now considering home loans, you need to do real analysis to determine the type of loan that is for you, and that is the goal of this post.
In this discussion TheWealthIncreaser.com will analyze the pros and cons of a 50-year mortgage so that you and others who may decide to give this loan real consideration, can better analyze the wisdom of engaging in this type of loan arrangement.
Pros & Cons
Pros:
- gets you into a home where your housing payments are relatively stable
- gets you into a home where housing payment will generally be lower than most mortgage loans
- you may be able to purchase home in better neighborhood/school district or near amenities that you desire
- maximization of interest and other housing related deductions on tax return for a longer period
- Allows you to potentially cash in and possibly avoid taxation on appreciation (after 7- 10 years or other time frame), and move-up to a new home assuming your home appreciates in market value
- provides you the opportunity to avoid rental increases from year to year
Cons:
- you can get into home with down payment assistance and a shorter loan term and possibly be at or near the same payment as a 50-year mortgage
- You can get a NACA or Builder Mortgage Reduction of Interest Buydown or other loan arrangement and pay a lower or the same payment as a 50-year mortgage (must be negotiated by you or your real estate agent)
- Interest-only or Adjustable-Rate Mortgages (ARM) may be a better option, depending on your goals
- Slow equity build-up, long payoff period, you may never gain true ownership during your lifetime
- Home prices could fall, and you could have to sell at a loss, which is non-deductible
- PMI/MIP may still apply and will be in effect for a longer period (applies to those who put less than 20% down)
If you decide to purchase a home for $320,000 with 3% down and a 50-year term, your monthly payment of principal and interest would be:
$320,000 Purchase Price
less $9,600 down payment
50-year tern
7% interest rate
Monthly Payment $1,811
Contrast with 30-year term payment at 7% and the same loan amount: Monthly Payment $2,065
DIFFERENCE $254 per month that you would save with a 50-year loan.
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Now let’s look at down-payment assistance (available in many communities across the United States) of $25,000 and a 30-year term and interest rate of 7%:
$320,000 Purchase Price
less $25,000 down payment assistance
30-year tern
7% interest rate
Monthly Payment $1,963
DIFFERENCE $1,963 minus $1,811 (You would pay $152 more per month; however you retain your $9,600 (3% down amount) that can be applied toward your emergency fund that you need to have.
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Builder Buydown of the loan to 5%
$320,000 Purchase Price
less $9,600 down payment
30-year tern
5% interest rate
Monthly Payment $1,666
Monthly Payment $1,666 versus $1,811 on 50-year mortgage (you would be paying $150 dollars less with a 20-year difference in payoff of loan).
Assuming a Builder Loan Buydown of 6% interest rate, the difference in payment is only $50 more than that of a 50-year loan of the same amount at a 1% less interest rate.
Monthly Payment $1,861 versus $1,811 on 50-year mortgage ($50 dollars more on your monthly payment with a 20-year difference in payoff of loan)
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The importance of looking at all options and analyzing your unique financial position cannot be overstated. By getting your real estate agent to negotiate with a builder that is offering a lower mortgage rate than the market rate (to attract new buyers) you can avoid the burden of a 50-year loan, possibly have a lower monthly payment, and position yourself to save the difference (1,811 minus 1,666 = $145 if the loan went down to 5%) to build up your emergency fund and better position yourself for comprehensive wealth building.
Alternatively, you could pursue a NACA or Down-payment Assistance that is often available locally and bring your interest rate and/or loan amount down and possibly approximate the monthly payment of a 50-year mortgage loan.
NOTE: Property Taxes, Hazard Insurance and PMI have not been taken into consideration in this example and is often included in your monthly housing payment, therefore you would have additional monthly costs. The above loan payments are principal and interest only.
Additionally, the pros and cons in this discussion depends on your perspective and the side of the fence that you are on–to a degree. What has been presented is objective numbers and analysis where appropriate. Closing costs and other fees that are often paid by the purchaser(s) and/or seller(s) are not included in this example. All numbers are approximations.
There is always the potential for property taxes and insurance to increase or decrease (they normally increase), however PMI normally remains constant until it is removed (you reach 80% of loan payoff or what is designated in your closing documents). This would normally be the case whether a 30-year or 50-year mortgage loan, as there is the potential for the monthly payment amount to increase under both loan terms when taxes, special assessments, or hazard insurance rates increase or are assessed.
The goal of this discussion is to help eliminate misconceptions about mortgage loans that are now prevalent in the atmosphere, so that those who desire enduring success can achieve that success, as your home buying decision making process can be one of the most important processes that you and many others will go through while you are here on planet earth.
Although the exact terms and conditions of a 50-year mortgage loan that is currently being promoted are not known, as it now stands it appears that the PMI (Private Mortgage Insurance) term on a 50-year loan will be longer due to the equity buildup occurring at a slower pace and the sheer term of the loan. Mortgage lenders are taking on more risk with a 50-year loan term, and it would appear that they would want to keep PMI on properties in their portfolio to reduce their risk exposure.
Now that you have some points of comparison, let’s now look at the loan payoffs after 10 years based on the scenarios presented above:
$320,000 Purchase price/3% down
50-year loan amortization:
7% interest
Equity position after 10 years: $300,539
Principal payment in year 10 — $1,323
Interest payment in year 10 — $21,088
Total Interest over life of loan $810,185
Total Payment over life of loan $1,120,585 (yes, you will pay over 1.1 million dollars over the life of the loan if you live and pay over the next 50 years–and you never sell or refinance)
The point of 80% equity when PMI can be removed with most lenders (you must ask) is $256,000 ($320,000 * .80).
You’ll still be paying PMI (don’t LOL) as after year 10 you still owe $300,539 therefore you still have a long way to go to get to $256,000 (frown).
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30-year loan amortization:
$320,000 Purchase Price
$25,000 down payment (local down-payment assistance program)
7% interest
Payment $1,963
Equity position after 10 years: $253,147
Principal payment in year 10 — $5,616
Interest payment in year 10 — $17,935
Total Interest over life of loan $411,551
Total Payment over life of loan $706,551
The point of 80% equity when PMI can be removed with most lenders (you must ask) is $256,000 ($320,000 * .80).
You would have reached that point ($253,147), so now is the time to request cancellation if you have not done so already (hooray).
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30-year loan amortization:
$320,000 Purchase Price/3% down
$9,600 down payment
7% interest
Payment $2,065
Equity position after 10 years: $266,362
Principal payment in year 10 — $5,909
Interest payment in year 10 — $18,872
Total Interest over life of loan $433,036
Total Payment over life of loan $743,436
The point of 80% equity when PMI can be removed with most lenders (you must ask) is $256,000 ($320,000 * .80). After year 10, you are roughly $10,000 off–you are getting close (smile).
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30-year loan amortization with Builder Buydown of the loan to 5%
$320,000 Purchase Price/3% down
5% interest
Payment $1,666
Equity position after 10 years: $252,486
Principal payment in year 10 — $7,175
Interest payment in year 10 — $12,820
Total Interest over life of loan $289,466
Total Payment over life of loan $599,866
The point of 80% equity when PMI can be removed with most lenders (you must ask) is $256,000 ($320,000 * .80).
Call your lender and have them remove PMI if they have not done so at this point as your balance is $252,486–actually you want to call them and request cancellation at some point in year 9 (you can now smile, as you will have more money in your pocket on a monthly basis).
30-year loan amortization with Builder Buydown of the loan to 6%
$320,000 Purchase Price/3% down
6% interest
Payment $1,861
Equity position after 10 years: $259,760
Principal payment in year 10 — $15,800
Interest payment in year 10 — $6,532
Total Interest over life of loan $359,562
Total Payment over life of loan $669,962
The point of 80% equity when PMI can be removed with most lenders (you must ask) is $256,000 ($320,000 * .80).
Prior to year 11 you can have your PMI removed as you are less than $4,000 away in “principal reduction” for qualifying to have PMI removed, be alert and on the lookout for when you hit 80 percent payoff as you can have PMI removed and lower your monthly payment for the rest of the loan term with most mortgage lenders (get ready to start dancing).
NOTE: The equity position in the above examples is based off of loan payoff, not appreciation in value due to market conditions.
Conclusion
The ultimate decision on the type of mortgage loan and the terms that you choose is your decision, however you want to analyze your loan determination in a careful, critical and as accurate a manner as possible so that you avoid putting yourself in a deeper financial hole.
You want to fully understand interest rates, APR’s, credit, appraisals, underwriting and other closing costs as that can help you avoid getting into a bad loan where it becomes difficult or burdensome to correct. Also be aware of the potential to get a lower than market interest rate with new home builders as they are now available in a number of new subdivisions in the Atlanta Metro Area at this time (interest rates under 4% and APRs under 5% as of 12/2025) that have below market interest rates and that could be a better alternative, depending on your goals, risk level, income and personal situation.
Always realize that there are many home buying options available, and in this discussion, TheWealthIncreaser.com have touched upon a few, however further research is totally up to you as there are many other options that you can pursue. Also, realize that the loan amortization of a mortgage is at play, therefore principal and interest will vary by the loan type and length, and so will your equity position in your home.
If current laws remains and you were to select a 50-year mortgage loan, you would be able to deduct interest longer than that of a 30-year loan and that could possibly save you additional money annually by you having a lower monthly housing payment amount and saving more on your income taxes based on your unique filing status. Your interest, points, PMI, and real estate taxes are all deductible at tax filing time for those who qualify, and a 50-year mortgage loan would allow for deductions to be utilized on your taxes for a longer time period than a 30-year mortgage loan if you were to remain in the home and not sell.
Although social safety net programs like health care, higher education along with rising costs in many areas of the economy are prevalent or under scrutiny at this time, and the income of many households being stagnant with many forgoing housing of their own, you want to make good or optimal decisions as it relates to your finances. With uncertainty in the economy a real concern, many are foregoing rentals of their own or the buying of their own home and are living with friends or moving back home with their parents or other loved ones.
Even so, a 50-year mortgage loan does not appear to be what is needed for most. However, a 50-year mortgage loan is yet another option in the long list of home buying options, and one that you must weigh with care.
The interest deduction, potential appreciation and other homeowner tax deductions along with relatively stable monthly payments, appear to be the best argument for 50-year mortgage loans!
If the home that you purchased with the 50-year mortgage loan in the example above appreciated and you were to sell the property for $400,000 after 10 years, even though you still owed $300,000 on the property you could still net a profit of possibly $90,000 (tax free if you were owner occupant in 2 of 5 years) or so after 10 years–and then purchase a new property with 20% down, a shorter loan term, possibly in a better neighborhood, and that could also give you time to get more income and qualify for a loan of shorter duration and at the best interest rate due to your “mastery of your credit” that you learned during your homeownership years (or right now–prior to your home ownership).
Always realize that the market can also go in the opposite direction and home prices could depreciate (fall in market value) in the market where your home would potentially be located!
Another argument on the con side (against a 50-year mortgage) is that you could also sell if using any of the options mentioned above–and you would have an even larger tax-free gain upon sale.
You want to realize at all times that there is always the potential for tax law changes as it relates to home interest deductions, other housing related deductions, and the exclusion of gain from the sale of your home. A recent example is the ending of “energy related credits” in the tax code as a result of the Big Beautiful Bill that passed in the United States congress in July of 2025.
Additionally, you want to be aware that the other options listed above also have relatively stable monthly payments and the potential for tax deductibility and exclusion of gain upon sale–up to a limit for those who qualify. Your unique financial position will determine how much you can save annually on your income taxes regardless of the mortgage loan that you choose.
Your money management personality will help ensure that you make good decisions whether you are a homeowner or renter and can position you for more success or less success, depending on how you consciously choose to manage your finances, and whether you decide to pursue your goals at a level that is your absolute best.
Also realize that true ownership value of a home cannot be underestimated from a psychological point of view, as a “satisfaction of deed” (home payoff where you get paperwork from your lender and can record that paperwork in your local jurisdiction to let the world know that you own your property) will more than counteract the deductions that are available over a longer time period in the minds of most.
If you desire to pass along wealth, a 50-year mortgage loan may not be your best option, however it may allow you to get into the home ownership arena, refinance your home later and further pursue your goals in a more stable environment as opposed to doing nothing or continuing to pay rising rental rates, assuming you have no better options.
If you were in financial position to do so, you could also possibly “buy your interest rate down” to an acceptable level and get a mortgage loan at a lower rate. As a buyer you can choose to pay for discount points to buy down your interest rate for the life of your loan. If you were to do so, you would pay money up front to purchase the points, and the lender would reduce their interest rate as a result.
You want to know that “discount points” can lower the interest rate on your mortgage for the life of your loan, rather than just for the first few years!
Although a 50-year mortgage loan is yet another option and may deserve consideration by you, it may not be the best option for you and could actually send you in the opposite direction of making your dreams come true, however the ultimate decision and mortgage loan that you choose is up to you.
All the best to your home loan selection success…
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