40-Year Mortgage options provide lower monthly payments and increased buying power.
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Longer Loan Terms, More Flexible Payment Options
- 40-Year Fixed Mortgages
- 40-Year Fixed Interest-Only Mortgages
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What is a 40-Year Fixed Mortgage?
A 40-Year Fixed Mortgage is a mortgage loan that the borrower repays over 40 years.
What is a 40-Year Fixed Interest Only mortgage?
40-Year Fixed Interest-Only Mortgages with Newfi are a fixed rate hybrid mortgage solution for borrowers looking to spread their payments out across a longer loan term and pay less in the early part of the loan. This can lower monthly payments even more than a 40-Year Fixed Mortgage.
For the first 10 years, borrowers pay only the interest balance on their mortgage, instead of both the principal and interest. After the 10 years are up, the loan effectively becomes a standard 30-year fixed rate loan with the same interest rate, where each payment goes toward both your interest and reducing your loan principal.
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How do I qualify for a 40-Year Mortgage?
You can use traditional or self-employed income (personal/business bank statements or 1099) to qualify. Newfi can also use assets to qualify for the 40-Year Mortgage. Depending on your situation, it could be easier to qualify for a 40-Year Mortgage than a 30-Year Mortgage.
Frequently Asked Questions
What are the Benefits of a 40-Year Mortgage?
- Borrowers who choose the Interest-Only option will have lower monthly payments for the first 10 years of the mortgage.
- Your interest rate is fixed for the life of the loan
- Gives you 40 years to pay off your loan
What are the Disadvantages of a 40-Year Mortgage?
- Interest rates may be higher than with a conventional, fixed-rate loan
- You pay more in interest over the life of the loan, compared to shorter-term loans like the 30 year fixed or 15 year fixed
- Takes longer to build equity
- Monthly mortgage payments will rise once the interest-only period ends, if you have one
- May be harder to refinance unless your property appreciates during the loan period
How Does a 40-Year Mortgage Compare to a 30-Year Mortgage?
- A 30-Year Fixed-Rate Mortgage allows you to pay less interest over the life of the loan compared to a 40-Year Mortgage. Interest rates are typically lower and you can start building equity immediately. Monthly mortgage payments are likely to be higher, however. Learn more about the 30-Year Fixed Rate Mortgage here.
- A 40-Year Fixed Rate Mortgage allows you to afford more house for a given payment and spread your payments over 40 years. The lower monthly payments also mean more cash for you to spend or invest on a monthly basis. However, you pay more in interest over the life of the loan and do not begin to build equity until the interest-only period expires, or you decide to end it. A 40-Year fixed Rate Interest Only mortgage offers borrowers even lower monthly payments during the first 10 years of the mortgage, which is an interest-only period.
What are My Other Mortgage Options?
- Want to build equity faster? Consider a 30-Year Mortgage
- Looking for easier loan terms? Consider an FHA loan, which also permits low down payments and more flexible credit qualifications.
- Looking for a lower rate option? Consider an Adjustable Rate Mortgage.
Can I Pay Toward My Principal Balance During the Interest-Only Period on a 40-Year Fixed Interest-Only Mortgage?
Yes! With a 40-Year Hybrid Mortgage from Newfi, borrowers are able to pay toward their principal balance during the IO period without having to worry about penalties or fees.
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