Experts caution against Trump’s 50-year mortgage. How to boost a traditional home loan’s affordability

President Donald Trump over the weekend slipped a missive into a Truth Social post that may well change the way many consumers buy a home—but experts are not sold on the idea. 

On Nov. 8, the President announced the proposal in a post titled "Great American Presidents," which included the words "50-year mortgage" above a photo of himself and "30-year mortgage" over a photo of President Franklin D. Roosevelt. In response, the head of the Federal Housing Finance Agency, Bill Pulte, said the agency would consider the matter, calling the President's tacit proposal a "complete game changer" for affordability.  

A 50-year mortgage product would ostensibly allow those with a smaller monthly housing budget to enter the housing market, because the minimum mortgage payment would be lower than that of a traditional 30-year fixed-rate mortgage. But critics say such a product could actually make the housing market less affordable and cost homeowners in interest and home equity. 

Here's why: Homeownership has become unaffordable for many Americans as the housing supply has tightened. Over the past 15 years, an increasing number of Americans have entered the housing market, and new home creation hasn't kept pace with demand. Earlier this year, the U.S. Chamber of Commerce estimated the nation is short a whopping 4.7 million homes. The proposal may worsen conditions, experts say. 

"More flexible financing is essentially a subsidy for housing demand, which will add to the pool and buying power of homebuyers without increasing the supply of homes, which will drive home prices up," Realtor.com Senior Economist Joel Berner said in a statement to CNBC Select. "The 'savings' from 50-year mortgages may be totally negated by rising home prices." 

On top of that, a borrower with this loan would likely have a higher interest rate and, as a result, pay significantly more over the life of the loan. Berner said he estimates that a hypothetical 50-year fixed-rate borrower would pay 86% more in interest than a 30-year fixed-rate mortgage borrower, and have over 10% less in home equity after a decade of homeownership. 

"This is not the best way to solve housing affordability. The administration would do better to reverse tariff-induced inflation, which is keeping the rates on existing mortgages high, and to encourage the expansion of housing supply by promoting homebuilding," he said. "Buyers do benefit from spreading out the high cost of a home purchase over a longer period, but lenders certainly benefit too by having a longer period to charge higher interest rates." 

If you're looking for a way to save on monthly payments, here are three things you can do right now. 

Let the government help. FHA loans, VA loans and USDA loans — backed by the Federal Housing Administration, Department of Veteran Affairs and U.S. Department of Agriculture, respectively — all typically offer lower rates than conventional mortgages.  

Every American can apply for an FHA loan. VA loans are exclusively for veterans and service members, while USDA loans are for those who buy property in certain rural and suburban areas. 

Pennymac offers all three loan types, but stands out for its low FHA loan rates, compared to other lenders. Qualified borrowers can receive $1,000 toward closing costs (which means you may be able to make a bigger down payment). 

Navy Federal Credit Union offers VA loans at some of the lowest rates on the market. NFCU also offers a $1,000 rate-match guarantee and does not require private mortgage insurance (PMI) — which could save you hundreds a month. 

The lower your rate on a 30-year-rate mortgage, the less you'll be paying each month, meaning you may be able to afford more just by picking a lender that offers lower rates. 

Generally, online-only lenders and credit unions tend to offer mortgages at lower rates than brick-and-mortar banks. That's because online-only lenders may have lower overhead, while credit unions are member-owned, so any profits they make go back into providing their members with affordable products. 

Better Mortgage is an option if you're looking for affordability. This online-only lender is known for its low rates and a diverse range of products — including low-down-payment options like FHA loans. Better also offers a rate match, promising to match whatever rate you get from a competitor or pay you $100. 

Connexus Credit Union is another option — we selected it as the Best Credit Union Mortgage Lender for Low Rates. The institution offers memberships with minimal red tape: Just make a $5 donation to the Connexus Association and you're in.

If you've not had any luck — even with lenders that offer below-average rates — think about postponing your homebuying plan to save up for a larger down payment. This can help you reduce your prospective housing costs in several ways. 

For one, you'll have a smaller mortgage on a house with the same sale price, meaning you will have to pay less each month — making that house easier to afford. 

You'll also pay less in interest over the life of the loan, because a smaller loan means less interest, too. Plus, the more you put down, the better your rate will be since lenders see you as less of a risk when you own more of the home outright. 

Boosting your down payment to 20% can also save you hundreds each month. Lenders require borrowers who put down less than 20% to purchase PMI, which costs 0.50% to 1.50% per year, or up to $513 on a median-priced home.

At CNBC Select, our mission is to deliver high-quality service journalism and comprehensive consumer advice to our readers, enabling them to make informed financial decisions. Every mortgage article is based on rigorous reporting by our team of expert writers and editors. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content independently of our commercial team and any third parties, and we pride ourselves on maintaining high journalistic standards.

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