Last Updated on September 22, 2023 by Eric Jeanette

40 Year Mortgages

40 Year Mortgages – Lender Options

Some home buyers are looking to keep their payments lower for cash flow purposes or to qualify for a larger mortgage amount. A 40 year mortgage is a good way to lower your monthly payment while maintaining the long term security of a fixed rate.

How a 40 Year Mortgage Loan Works

A 40 year mortgage gives you an even lower payment than a 30 year fixed term by stretching out the amortization schedule over a longer period of time while maintaining the stability and security of a fixed rate.

Some lenders offer the option of having a true 40 year mortgage term, or mortgage that is amortized over 40 years, but due in 30 years. With the second option, you must either pay the mortgage in full after 30 years, or refinance the loan. The actual balance due after 30 years will vary depending upon how much additional principal you have paid during the 30 year term.

A 40 year mortgage offers low payments similar to that of an adjustable rate mortgage, but gives you the security of a fixed rate and payment over the life of the loan, regardless of how high interest rates get. You can also build equity in your home at a faster pace than other low payment loans.

Another benefit of a 40 year mortgage is you can increase the amount of home you can afford and the amount of extra cash you have on a monthly basis. The more cash you have in hand, the more you can put toward your savings or invest in your 401k or retirement fund.

For example, if you had a $200,000 30 year mortgage and spread it out over an additional 10 years, your payment might drop by $100 per month. Imagine what that extra $100 could do for your retirement fund or to pay down high interest consumer debt.

Click to be connected to a lender that offers 40 year mortgages in your state.

40 Year Mortgage Calculator

Our 40 year mortgage calculator will help provide you with the payment difference between the 30 year and 40 year fixed rate options. The calculator is using the same interest rate for both options. Check with us to see what today’s rate is for both a 30 year and 40 year mortgage.

40 Year Mortgage Calculator


30 Year Payment
40 Year Payment
Monthly Savings

Benefits of a 40 Year Mortgage

  1. It has a balloon payment at the end of 30 years. You can either pay off the remaining balance or refinance your loan.
  2. You can build equity faster with a 40 year mortgage than with an adjustable rate mortgage or interest only loan.

A 40 year mortgage can offer you more buying power because it gives you lower payments than a traditional 30 year mortgage. Its an ideal loan for home buyers in a high cost housing market. A 40 year mortgage provides a great alternative for people who want to avoid adjustable rate mortgages or interest only loans.

Who Is a Good Candidate for a 40–Year Mortgage?

A 40 year mortgage is great for people in high cost housing where the average growth in property value is surpassing the average growth in income.

It can help keep your payments low much like an interest only loan, but with the stability of a fixed interest rate and monthly payment. These longer term mortgages are very beneficial for people who dont plan on moving any time soon.

40 Year Mortgage Interest Rates

The fist thing you should know is a 40 year mortgage option is not available in a conventional or FHA loan. Those two programs have the most competitive rates.

40 year mortgages are offered for alternative mortgage programs and the rates for those are slightly higher than that of a 30 year fixed rate mortgage. In some instances, you may pay as much as 1/4-1/2 of a point more.

Despite a slight increase in rate, the 40 year mortgage payment will be lower than a 30 year fixed payment. Therefore, you should do the analysis between the two rates to see how much lower your payment could be.

Click to Get a Quote for a 40 Year Fixed Rate Mortgage

40 Year Mortgage Lenders

The 40 year fixed rate mortgage is not something that all lenders offer. It is considered to be a niche product and not the easiest program to find. However, we can help you to get a competitive quote today.

With the changes in lender guidelines, we still have options for you to find a 40 year mortgage lender today. These are just a few who offer the program and each may have different credit score and down payment requirements.

Click to get matched with a 40 year mortgage lender

The following are wholesale lenders who work through a broker network only and not direct to consumer:

  1. Newrez Wholesale
  2. Newfi Wholesale
  3. Acra Wholesale
  4. LendSure
  5. New American Funding 40 year mortgage

Please check with us here so we can pair you with the lender who fist your needs the most.

Refinancing a 40 Year Mortgage

You can refinance a 40 year mortgage at anytime and you do not have to wait until the initial 10 year term has expired.

It makes sense to refinance when prevailing interest rates are much lower than the rate on your current mortgage. You may also want to refinance to cash out equity for home remodeling or for debt consolidation.

When you refinance a 40 year mortgage, there should be a net tangible benefit such as a lower interest rate, better term, lower payment, or to cash out.

If you are refinancing to cash out equity, it may be possible to have a larger loan amount than you do now while keeping your payment the same.

Is a 40 Year Mortgage a Good Idea?

A 40 year mortgage is a good idea for anyone who is looking for a lower mortgage payment. You get the security of a fixed rate for an extended period of time. The only drawback is you are not paying down the mortgage balance as quickly with a 40 year mortgage.

Does Fannie Mae Offer 40 Year Mortgages?

40 year mortgages are not offered by, and are not backed by Fannie Mae. Lenders who offer a 40 year mortgage are keeping the products in their own portfolio. They are called portfolio lenders.

Who Offers 40 Year Mortgages?

Many lenders offer 40 year fixed mortgages, but often times your local bank will not. Mortgage brokers have access to wholesale lenders who do not lend direct to consumer. Some of these lenders offer a 40 year mortgage option for primary residences.

40 Year Interest Only Mortgage

Interest only mortgages offer the benefit of having a lower monthly down payment requirement. With interest only loans, the initial interest only period is anywhere from 5-10 years.

With a 40 year interest only loan, your interest only period will be 10 years, then you will make fully amortized payments for the remaining 30 years. The best part is you will be locked into your rate for 40 years.

Read more about interest only loans.

Alternative to a 40 Year Mortgage

The alternative to a 40 year mortgage is an interest only loan. This program will also lower your monthly payments, but you are not paying down the mortgage. You do have the ability to make principal payments if you can.

Bottom Line

A 40 year mortgage is a safe option to purchase a home with a lower monthly payment while still enjoying a fixed rate. If you have difficulty finding a lender who offers the program, we can help.

We are able to help you to find an 40 year mortgage with a professional lender in the following states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming.

The Pros and Cons of a really long loan

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40 Year Mortgage