Several factors have led to the current housing affordability crisis in the U.S.:

• Mortgage rates plummeted during the pandemic, setting off bidding wars for homes and driving up home prices for both new and existing homes.
• Difficulties in obtaining building materials during the pandemic and persistent labor shortages slowed the construction of new homes, another contributing factor to higher home prices.
• In an effort to control high inflation, the Federal Reserve raised benchmark rates, leading to higher borrowing costs for lenders and consumers. Potential homebuyers were forced out of the market because they couldn’t afford the higher borrowing costs.  

Those and other issues are among the reasons President Donald Trump in November suggested that homebuyers be given the option of a 50-year home mortgage, a move he believes would lower monthly home mortgage payments and “make the American dream affordable again.”

The proposal sparked widespread reaction, largely from economists who warned that 50-year mortgages could further inflate home prices and make it difficult for homeowners to build long-term wealth.

According to an analysis by UBS Bank, homebuyers would realize only a small reduction in monthly payments, pay an exorbitant amount in total interest (225% more than the total cost of a home), and build little equity.

“That’s just an awful, awful scenario,” said Scott Steelman during the Business Record’s recent Project515 virtual event on housing. Steelman is a real estate agent with Iowa Realty Co. and first vice president of the Des Moines Area Association of Realtors board. “Lenders will tell you that there’s a better product than a 50-year [mortgage] and it is buying within your means.”

The Iowa Bankers Mortgage Corp., a financial services company that is affiliated with the Iowa Bankers Association, provides mortgage origination, processing, underwriting and mortgage servicing services to community banks in 11 states. Robert Hartwig, president of Iowa Bankers Mortgage Corp. and a Project515 panelist, determined how a 50-year mortgage would affect the average buyer in Iowa.

In early December, the average amount of a new home loan in Iowa was $275,000. Using a fixed interest rate of 6%, Hartwig said he determined a borrower’s principal and interest payments would only be 12.1% less a month on a 50-year loan compared to a 30-year loan.

Like the UBS Bank analysis, Hartwig determined that borrowers would pay twice as much in interest on a 50-year loan than a 30-year mortgage and the amount of equity built up in a home would be severely reduced.

“That just isn’t doing the buyers any favor,” Hartwig said. “It just isn’t that much lower of a payment for how much interest you would pay.”

The Business Record also reached out to three others about their thoughts on 50-year home mortgages. Here are their responses:

Kim Downing-Manning, vice president, manager, residential real estate, Bankers Trust Co.: “While lower monthly payments can help more people obtain homeownership, a 50-year mortgage would lead to borrowers paying dramatically more interest compared to a 15- or 30-year mortgage and taking longer to build equity in their home. Typically, the longer the term on the mortgage, the higher the interest rate, as well. Bottom line: A 50-year mortgage can improve affordability, but it comes at the cost of significantly higher lifetime interest and slower wealth building.”

Erika Hansen, real estate agent, Re/Max Real Estate Center: “My fear with a 50-year mortgage is that we could possibly be putting people into homes that they can’t necessarily afford. Today, consumers qualify for a home that they can afford. When the insurance and property taxes rise, they can absorb [those costs] as any homeownership maintenance that pops up. The other issue is the equity that a homeowner will accumulate will end up being minimal. Often, sellers use their equity for a down payment on a new home or to make home improvements.”

Jim Plagge, president and CEO, Bank Iowa: “My initial reaction [to the idea] was negative because I don’t believe it’s financially prudent to take out a 50-year loan. However, a 50-year loan would, in fact, qualify applicants with about 10% less income versus an applicant for a 30-year loan, so more borrowers would become eligible for a home loan. I would advise borrowers to increase their payment amount when they are able to reduce the amortization to 30 years or less. The total interest expense on a 50-year loan versus a 30-year loan is almost double.”

In November, Federal Housing Finance Agency director Bill Pulte confirmed that the Trump administration is working to develop a plan for 50-year mortgages. Little more has been said about the idea since then.

History of home mortgages

Thirty-year, fixed-rate mortgages for homes haven’t always been the norm in the United States.

Prior to the Great Depression, which began in 1929 and lasted over a decade, mortgages were typically between three and five years with a large balloon payment due at the end of the loan’s term. Often, if a loan holder couldn’t make the large payment, the loan was refinanced.

After the stock market crash of 1929, the U.S. mortgage system came to a halt, with home prices collapsing and widespread unemployment leading to home foreclosures.

Consequently, homeownership declined. In an effort to restore the home mortgage market, the administration of Franklin D. Roosevelt pursued several initiatives including creating the Federal Housing Administration that promoted homeownership. The FHA insured mortgages, encouraged low down payments, usually around 10%, and longer repayment terms of 20 to 30 years with fixed interest rates.

The terms of FHA-backed mortgages proved attractive to would-be borrowers and prompted private mortgage lenders to adopt similar mortgage strategies to remain competitive.

Before the Great Depression, the homeownership rate in the U.S. was 47.8%, according to the Office of Policy Development and Research, the research arm of the U.S. Department of Housing and Urban Development.

After the Depression-era changes were made to mortgage products, the homeownership rate ballooned, from 43.6% in 1940 to 61.9% in 1960. In 2004, the U.S. homeownership rate reached a record high 69.2%, according to the Federal Reserve Bank of St. Louis. In the third quarter of 2025, the rate was 65.3%.