this post was submitted on 12 Nov 2025
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What?
Some random numbers that are of course VERY variable, but I just ran the calcs with 400k, 5% down, 6% APR for 30 and 50 years
$2648 for 30 years $2369 for 50
Now that is of course not a great deal, presumably you'd also get a little better rate for the longer loan (more points) but it's not a dollar.
Edit: wait you'll get a better rate for the shorter term loan, so this will probably further close the gap. Still not to $1 surely
I just question if the 50 is getting the same rate as the 30. Obviously, all else equal, math is math. Banks see that $300 savings as a potential extra $150 a month.
Don't forget that on top of all of that you have to pay property taxes.
The calc I used for that number put $3k property tax annually amortized, good call
$3k is generous. We're paying $12k
Fair, but it also shouldn't affect the relative prices from 30 and 50 year
And my property taxes are 2k per year and that's high for this county. It's all relative and back of the envelope math is all about getting a rough idea, not getting spot on for any specific person
Yeah I compared some numbers and guessed a plausible interest rate for the 50 year based on the 15 vs 30 year interest rates at a couple of real banks near me
50 years at 6% with 5% down on 200k (fairly plausible for a decent home where I live and realistic for a first time home buyer who 50 year mortgages are clearly catering to) is 1k/mo almost exactly
So the difference is pretty small on a realistic first time home buyer's home, but having been on the edge of approval for a home loan before that $100/month can absolutely be the difference between getting the home now and having to wait another 2-4 years depending on markets. In my case they assumed my insurance would cost more and that actually made all of the difference in my home loan application because that shaved about $100 per month off
One interesting side note, one of the local credit unions I looked at offers different interest rates depending on the value of the loan! For a 30 year fixed loan they offer the following rates:
So yeah that's new! I've not seen that before!
So that's a great picture I think for the difference between the loan durations.
I of course think the real problem is that average people might need a 50 year loan to barely pay for a house these days. But it isn't "nothing" between the terms, it does help in the super short term
This raises questions about the opportunity cost of $300/mo. It's not a huge amount of money, but for some budgets, it might make a car payment or groceries possible. Or, if saved or invested wisely, would it tip things in favor of the 50-year term?
$300/month (at the beginning of the month) invested over 30 years, compounded annually at 6% = $198,290.40
If you kept that going for a full 50 years, the last 20 years of interest really starts to ramp up and gives you a final value of $1,084,402.22
If instead, you ONLY paid the mortgage for 30 years, then invest the full mortgage payment of $2,648 into the investment account for the next 20 years (a total of 50 years out. Same end point) you would have an investment account worth $1,215,042.49
So, even in your scenario it is still a loss to take a 50 year over the 30 year, and the 300$ difference is negligible. If $300 was the difference of someone being able to afford groceries or not for the month, then they should not have qualified for a $2,648/mo mortgage.