7 min read May 13, 2024

40-Year Mortgage: Pros, Cons, And Alternatives

Home buying is the biggest investment of one’s life. And so selecting the right mortgage term for your home loan can sometimes be a tricky task.

Lenders offer a range of home loan terms from 9 to 40 years. As a home buyer, you must be aware of the factors associated with the length of a home loan.

A 40-year mortgage takes 480 months to pay off a loan on a property. The borrowers can opt for amortizations to pay off the loan sooner.

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  • A 40-year mortgage offers lower monthly payments, but it comes with higher interest rates and a longer loan duration.
  • Homebuyers have various alternatives to a 40-year mortgage. These include 30-year and 15-year mortgages, refinancing options, and interest-only loans.
  • It is crucial to consult mortgage professionals when you decide on a mortgage term. They can provide valuable insights and help you navigate lender options.

What Is a 40-Year Mortgage?

A 40-year mortgage loan term lasts for 40 years. It can be a preferable option if you need more time to pay off your mortgage. Commonly, a 10-30-year term loan is attached to mortgages.

40-year mortgages are rarely available. You can find one with the Federal Housing Administration (FHA). To qualify for an FHA mortgage, you will need a credit score of 750-850.

Also, if you want to save on your monthly payments, you can opt for a 40-year mortgage. This way, you can boost your affordability. But keep in mind that the longer the loan, the more interest you will have to pay.

How to Get a 40-Year Mortgage?

A 40-year mortgage comes with lower monthly payments. Here are some guidelines for you if you wish to opt for this mortgage:

  1. Consult a Housing Counselor: It’s always advisable to consult a housing counselor irrespective of the mortgage type, to gain better insights. The U.S. Department of Housing and Urban Development gives nationwide free access to counselors.
  2. Explore Around: Look around to get the best 40-year mortgage plan. Try to get at least 4 quotes before you take the final call. Keep a record of each mortgage plan. You can compare their interest rates, down payments, and closing costs.
  3. Choose the Best Lender: Apply with a lender that best suits your requirements. The process of applying for a 40-year mortgage is the same as in other mortgage terms.
  4. Review Before Signing: Before you sign, thoroughly read the contract. Also, consider all the drawbacks of a 40-year mortgage.

Additionally, confirm that there are zero prepayment fees. This can help you save on interest payments over the long term.


A 40-year mortgage may benefit the borrower in many ways, that include:

  • Lower Monthly Payments: In this type of mortgage, lower monthly payments make it easy for you to manage funds.
  • Improved Cash Flow: You can invest the rest of the liquid funds with lower monthly payments.
  • Better Budgeting: It allows you to budget for long-term goals such as a retirement plan.
  • Greater Flexibility: A 40-year mortgage can be a good option for you if you have a fluctuating income. Long-term mortgages allow overpayments without penalties and offer great flexibility. This way, you can pay lower repayments when you are in a financial crunch.

Furthermore, a long-term mortgage plan makes your loan more manageable.


Before making any financial decision, it’s best to weigh the cons:

  • Higher Interest: You will have to pay high interest due to the longer tenure of the loan.
  • Lower Equity: With low monthly payments, it can take longer to build equity in your home. This will make it difficult to sell or refinance the home in the future.
  • Longer Duration of the Loan: You will have to keep paying the loan even after your retirement, with a 40-year mortgage. This can become a financial burden for the next generation.
  • Limited Lender Options: You may have limited lender options as not every lender allows this type of mortgage.

Additionally, when calculated, the total amount repaid is more than a short loan term.

Alternatives to a 40-Year Mortgage

Below are the options you can choose as an alternative to a 40-year mortgage:

  1. 30-Year Mortgage: In a 30-year fixed-rate mortgage, you are likely to pay less interest on your loan.
  2. 15-Year Mortgage: You will have to pay a little higher monthly payment for this mortgage. But the term will be shorter.
  3. Refinancing: You can consider refinancing your current mortgage to a lower interest rate or a shorter loan term. This can reduce monthly payments and save money on interest throughout the loan.

Furthermore, you can look for an interest-only loan, based on your credit score and goals. Interest-only loans offer benefits similar to a 40-year mortgage.

»Also Read: 15 vs. 30-Year Mortgage: Find Out What’s Best For You

Short-Term Mortgages vs. 40-Year Mortgages

To help you make an informed decision, below are the key difference points between a short-term mortgage and a 40-year mortgage:

40- Year MortgageShort-Term Mortgage
Monthly Payments A 40-year mortgage offers lower monthly payments.A short-term mortgage has higher monthly payments than a long-term mortgage.
Loan AvailabilityThis type of mortgage is less common and may have limited options available from lenders.A 10-30-year mortgage is easily available.
Total Interest PaidA 40-year mortgage will often result in higher interest payments overall during the loan’s term. The shorter the loan term, the lesser the total interest you pay for the span of the loan.

Ultimately, the choice between a short-term and a 40-year loan will depend on your financial situation, goals, and needs. It’s important to carefully consider the trade-offs of each option and consult a mortgage professional for a home loan.

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Bottom Line

A 40-year mortgage may be a good option for homebuyers who want to manage their funds initially. Before considering this type of loan, weigh its pros and cons.

Apart from this, the burden of this type of loan can be transferred to your children. So you must make a decision that doesn’t compromise your family’s financial well-being.

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Frequently Asked Questions

Is there any thing like a 50-year mortgage?

In 2006, mortgage lenders in southern California began offering 50-year fixed-rate mortgages to homebuyers. This was due to the rise in home prices in the state.

Do 40-year mortgages have higher interest rates?

Yes, a 40-year mortgage has higher interest rates as compared to a 30-year mortgage. This is because the investors have to wait longer for the payoff.

Can I refinance to a 40-year mortgage?

Yes, you can refinance to a 40-year mortgage depending on the offer of your lender.


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