In 2025, the average age for a first-time homebuyer is 38 years old. That’s nearly the same as it was in the 1930’s, before the Federal Housing Administration (FHA) introduced the now standard 30-year mortgage.
That loan structure was revolutionary for Americans in the 1930s, but life and finances have undergone significant changes since then. Is it time for a new solution?
The 30 Year Mortgage Was Built for a Different America
The FHA launched in 1934 to fix a broken system. At the time, only about 10% of Americans owned homes, mortgage terms were short, and balloon payments were the norm. Life expectancy hovered around 60 years old. With that in mind, a 30-year mortgage fit the average adult’s lifetime.
Since then, American life expectancy has increased by roughly 25%. Home prices have skyrocketed, and many can’t afford the “American Dream” in their lifetime.
Why 40-Year Mortgages Could Be a Modern Lifeline
Forty-year mortgages aren’t yet common in regulated loan programs like Fannie-Mae or Freddie-Mac. Today, they mostly show up in loan modifications. In other words, it’s used when borrowers struggle to make payments and avoid foreclosure by stretching the loan term.
But here’s the question: why wait to offer this kind of relief when, for many, it’s inevitable?
Making 40-year mortgages available specifically for first-time homebuyers could be a game-changer. According to The Zebra, the average length of a first-time homebuyer stays in their home is just 2-5 years. In that short window, a longer-term loan could significantly reduce their monthly payment costs, offering more beneficial breathing room without the buyer ever intending to carry the loan for four decades.
While still relatively rare for purchases, 40-year loans are available through:
- Portfolio lenders: credit unions that keep loans on their own books
- Non-qualified mortgage (non-QM) lenders: which use flexible underwriting, similar to that you’d find with DSCR loans used by real estate investors.
With a 40-year mortgage, payments are stretched over 480 months instead of 360. Given the longer life expectancy in the U.S., this model makes sense. It can make homeownership more realistic for first-time homebuyers and younger families.
Most Americans begin their housing journey as renters. And it’s becoming harder and harder to escape that cycle. Consider these trends since 2017:
- Apartment rents have increased by 29%
- Single-family home rents have increased by 43%
- During that same period, average wages have grown just 23%
- The average American now spends 30% of their income on housing
TAG Perspective: As a recent renter myself, I was priced out of our Raleigh neighborhood last year after our rent increased by 38% in just two years.
John Hope Bryant, a leading advocate for 40-year mortgages and financial literacy entrepreneur, explains:
“The benefits of this proposal extend beyond individual homeowners. Expanding access to homeownership creates a ripple effect that stimulates the broader economy. Homeownership drives consumer spending as new homeowners invest in furniture, appliances, home improvements, and other goods and services, supporting jobs and contributing to GDP growth.” (CNBC.com)
Is this History Repeating for the Better?
The 30-year mortgage once saved the housing market. Nearly a century later, 40-year loans could help solve today’s affordability crisis.
Yes, equity will build more slowly, and borrowers will pay more interest over time. But greater access and affordability may outweigh those trade-offs. So, what’s the lesser of two evils?
We need more housing- no question. That’s a major driving force behind the rising cost of living. But we also need tools that help people buy that housing. A 40-year mortgage could be one of them.
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