40-Year Mortgage Calculator

What Is a 40-Year Mortgage?

A 40-year mortgage is a home loan with a repayment term of 40 years — 10 years longer than the standard 30-year mortgage. By spreading payments over a longer period, borrowers get a lower monthly payment, making this option attractive in high-cost housing markets where affordability is a challenge.

How Does a 40-Year Mortgage Work?

Like a standard mortgage, a 40-year loan uses amortization to split each payment between principal and interest. However, because the loan stretches over an additional decade:

• Monthly payments are lower since the principal is spread over more months
• Interest accumulates for longer, resulting in significantly higher total interest costs
• Equity builds more slowly in the early years compared to shorter-term loans
• Interest rates are typically higher (0.25%-0.50% above 30-year rates)

30-Year vs. 40-Year Mortgage Comparison

Who Should Consider a 40-Year Mortgage?

A 40-year mortgage may be appropriate if you:

• Live in a high-cost-of-living area where 30-year payments are unaffordable on your income
• Need maximum monthly cash flow to manage other financial obligations
• Plan to refinance to a shorter term once your income increases or rates drop
• Are receiving a loan modification to avoid foreclosure on an existing mortgage
• Are a real estate investor optimizing for cash flow on rental properties

When a 40-Year Mortgage May Not Be Ideal

Consider other options if:

• You can comfortably afford a 30-year payment — the interest savings are substantial
• You plan to stay in the home less than 10 years (you’ll build minimal equity)
• You’re focused on long-term wealth building — slower equity growth limits your net worth gains
• You want the consumer protections of a Qualified Mortgage (QM) — most 40-year loans are non-QM

Example: $500,000 Loan at 7.0%

For a $500,000 home purchase with 10% down ($50,000 down, $450,000 loan):

The 40-year option saves $75/month but costs an additional $323,218 in total interest over the life of the loan.

Availability and Qualification

40-year mortgages are not offered by all lenders. They are typically available from:

• Credit unions — some offer extended terms to members
• Portfolio lenders — banks that hold loans on their own books rather than selling to Fannie Mae/Freddie Mac
• Non-QM lenders — specialized lenders offering non-traditional loan products
• Loan modification programs — FHA and other programs may extend terms to 40 years for distressed borrowers

Qualification requirements are generally similar to standard mortgages: stable income, acceptable credit score (typically 620+), and a reasonable debt-to-income ratio.

Tips for Using a 40-Year Mortgage Wisely

1. Make extra payments when possible to reduce total interest and build equity faster
2. Plan to refinance to a shorter term once your financial situation improves
3. Compare total cost, not just monthly payment — the low monthly payment can obscure the true cost
4. Consider a 30-year with lower down payment as an alternative to achieve similar monthly payments
5. Factor in PMI — slower equity building means you’ll pay mortgage insurance longer if you put down less than 20%