A 40-year mortgage may not be what you expect. Yes, it is only 10 years longer than the traditional 30-year mortgage, but the increased time to amortize interest makes it significantly more expensive, and though it may seem more affordable on a month-to-month basis, the increased amount of interest you’ll pay over the entire loan makes it hard to pay off the principal and build equity. (Note: SoFi does not offer a 40-year mortgage. However, we do offer many conventional mortgage loan options.)
Additionally, 40-year mortgages generally lack federal government backing, so it can be hard to find a lender that originates them.
Here’s a deep dive on exactly what these mortgages are, how to qualify for one, how much they cost, how they compare with other loan terms, and what factors you’ll want to consider if you’re thinking about one.
Table of Contents
- Key Points
- • Spreading payments over 40 years results in lower payments than 30- or 15-year terms.
- • The total cost of the loan is significantly higher due to interest accumulating over an extra 10 to 15 years.
- • Lenders typically charge a higher rate because they consider them higher risk than traditional mortgages.
- • A large portion of early payments goes toward interest rather than the principal, leading to significantly slower equity building than shorter-term loans.
- • These loans can be hard to find because they normally fail to meet federal government standards for qualified mortgages.
Understanding a 40-Year Mortgage
To understand a 40-year mortgage, it’s important to look at how the mortgage market works and where this type of loan fits. Lenders typically sell traditional 30-year mortgages on the secondary market to government-sponsored enterprises Fannie Mae and Freddie Mac. These entities bundle the loans into mortgage-backed securities.
For the loan to be a qualified mortgage, it must meet certain criteria. For example, the loan term must not exceed 30 years (the average mortgage term length in the U.S. is three decades). The Consumer Financial Protection Bureau doesn’t consider 40-year loans as qualified mortgages. Many in the industry refer to these as nonconforming loans.
Due to the lack of government backing, 40-year mortgages are usually harder to obtain and more expensive than conventional 30-year loans. As a result, this type of mortgage often fails to make sense for borrowers or lenders.
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How a 40-Year Mortgage Works
When lenders do offer 40-year mortgages, there are a number of different ways they can structure the loans:
• A 40-year adjustable-rate mortgage: Lenders can structure a loan as an adjustable-rate mortgage with a lower fixed interest rate for an initial period, such as five or 10 years, and a fluctuating rate for the remainder of the 40 years.
• An interest-only 40-year mortgage: This product typically features an initial interest-only period — often 10 years — after which the loan converts to a traditional schedule.
• A 40-year fixed-rate mortgage: With this structure, the interest rate remains the same for the entire term.
Most 40-year mortgage loans require the owner to occupy the property as their primary residence. One of the most significant hurdles you’ll encounter in the mortgage process is finding a lender that offers 40-year mortgages. Qualification works as it does with a 30-year loan, but because the lender has to keep the loan on its books, it will be extra judicious about lending when it comes to a 40-year mortgage.
40-Year Loan Modification
If you’re reading up on 40-year mortgages, you may come across the term as it relates to home loan modifications. Borrowers with FHA loans (from the Federal Housing Administration) who experience financial hardship may be eligible to have their loans modified or recast into 40-year terms.
Advantages and Disadvantages
With a typical 40-year mortgage, it’s clear what the advantage is because there’s only one: a lower monthly payment. A lower monthly payment may make buying a home possible for some borrowers, so it’s tempting to look at a 40-year mortgage despite the drawbacks.
The following table shows the lone pro, as well as the risks and drawbacks of a 40-year mortgage:
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Pros:
• Lower monthly payments
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Cons:
• Increased total interest over the life of the loan due to the extended term
• Potentially higher interest rates
• Slower equity building than conventional loans
• Harder to find lenders who offer this loan type
Qualifying for a 40-Year Mortgage
Qualifying for a 40-year mortgage typically requires meeting stricter standards than other types of mortgages. In addition to the loan type and interest rate the lender can offer you, other mortgage qualification factors may include:
• Credit score: There is no government-mandated minimum score for a 40-year mortgage, but generally, the better the score, the better your rate.
• Income verification: The lender will examine your employment history and how reliable your source of income is.
• Debt-to-income ratio: The amount of debt you have affects how large a mortgage you can take on — higher debt equals less borrowing power.
• Down payment: The down payment affects the loan-to-value ratio, which affects how much the lender is willing to lend and what rate it will offer.
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Comparing 40-Year Mortgages to Other Loan Terms
When you look at the costs on a 40-year mortgage, it becomes very clear what the tradeoff is. Here is an example using the interest rates in March 2026. Note that the 40-year example has a rate that adjusts every five years, so the total interest paid is an estimate.
| Mortgage amount | Interest rate | Monthly payment (principal and interest only) | Total interest paid over the term | |
|---|---|---|---|---|
| 40-year 5/5 adjustable-rate mortgage | $450,000 | 5.95% | $2,561.75 | $779,640 |
| 30-year fixed mortgage | $450,000 | 6.04% | $2,706.56 | $524,361.60 |
| 15-year fixed mortgage | $450,000 | 5.44% | $3,676.27 | $211,728.60 |
For a 40-year loan, you’ll pay $779,640 in interest for a $450,000 mortgage. In total, that’s $1,229,640 you’ll pay for the $450,000 loan.
The monthly payment on a 40-year mortgage is only about $145 less for a $450,000 mortgage. All told, you would save around $255,000 by choosing a mortgage term of 30 years vs. a 40-year mortgage. Borrowers who opt for the lowest payment, thinking they will pay off the mortgage early, would be wise to make sure they understand whether there are prepayment penalties before signing on the loan.
Factors to Consider With a 40-Year Mortgage
You will pay significantly more for a 40-year mortgage vs. a 30-year mortgage, so there are several important considerations.
Long Repayment Period
To pay off a 40-year mortgage loan will take much longer than standard terms. And because you’re paying a greater percentage of interest in the beginning of your loan, it will be hard to pay down the principal early on.
Slow Equity Building
A 40-year mortgage loan makes building equity more difficult because of the increased interest costs. Difficulty building equity can make it harder to move because you may not have adequate profits from the home sale to make a down payment on your next home. It can also make refinancing challenging.
High Interest Costs
When you look at a mortgage calculator, you may find it shocking how much more interest you’ll pay on a 40-year mortgage in comparison to a 30-year mortgage.
When a 40-Year Mortgage Makes Sense
A 40-year mortgage could make sense if:
• You plan to refinance your mortgage in the future: If you need to keep monthly costs as low as possible and refinance at a later date, such as when you’re renovating your home, then you may want to consider a 40-year mortgage.
• It improves immediate affordability: A 40-year mortgage may be the determining factor in buying a home. You could refinance down the line and potentially save a significant amount of money.
The high cost of a 40-year mortgage is a major drawback. The total amount of the mortgage works out to be hundreds of thousands more than a traditional 30-year mortgage. Be sure you’re aware of the increased costs and risks before committing to a 40-year mortgage.
The Takeaway
A 40-year mortgage isn’t common, but it makes sense in certain scenarios. When you compare a 30-year mortgage with a 40-year mortgage, you’ll pay only a couple of hundred dollars more per month on a 30-year mortgage, but you’ll save hundreds of thousands of dollars over the life of the loan. (Note: SoFi does not offer a 40-year mortgage. However, we do offer many conventional mortgage loan options.)
If you’re considering a 40-year mortgage, consult a lender you trust. They will have many tools at their disposal to help you afford a home of your own.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
FAQ
Are 40-year mortgages widely available?
No, 40-year mortgages are not common because they are nonconforming, nonqualified loans. Qualified mortgages follow strict government guidelines, so they’re less risky and eligible for purchase by Fannie Mae and Freddie Mac. A 40-year mortgage falls outside the maximum allowable 30-year term for a qualified mortgage.
Can I refinance a 40-year mortgage?
Yes, you can refinance a 40-year mortgage at a later date, provided you can qualify for the new loan you’re applying for. The rules are generally the same as for other mortgage terms.
Is a 40-year mortgage a good option for first-time homebuyers?
There are serious downsides to a 40-year mortgage. It may have a more affordable monthly payment than a 15- or 30-year mortgage, but you’ll have a hard time building equity (which is important for first-time homebuyers), and you’ll pay much more in interest over 40 years than you would 30 years.
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