TikTok Expert Explains Why 40-Year Mortgages Are A Bad Idea For Most First-Time Home Buyers

Man holds house and bag of money

Ever just get a feeling everything is very *off* in the economy right now? Or that the banking system is overwhelmingly rigged against you?

The Federal Housing Association recently greenlit 40-year mortgages, aiming to boost home affordability with reduced monthly payments. The program starts in May 2023, with the goal of letting first time home buyers stretch smaller payments over longer terms. An FHA loan can only be used for first time home buyers, so it’s important to note that this lending product wouldn’t be used for real estate investors.  

Lower payments sound great, but savvy home buyers are having a hard time understanding if the value is there when interest rates are so high.

40-year mortgages, by the numbers

Bankrate.com broke down the math, analyzing the costs of a 30-year vs. a 40-year mortgage. They assumed a $312,000 loan at 6.85% interest. 

The website found that the monthly payment for a 30-year mortgage on a $312,000 loan would be $2,044. The monthly payment on a 40-year mortgage would be $1904.

The total payment for a 30-year mortage would be $423,987, with interest. The total payment on a 40-year mortgage would be a staggering $602,384 with interest.

Related: Should You Rent Or Buy A Home? The 5% Rule Helps You Make The Life-Changing Decision

That’s an astronomical difference just to pay a little over a hundred dollars more a month for 10 years. 

Do 40-year mortgages make sense?

John Liang, the creator of johnsfinancetips on TikTok, seems skeptical a 40-year FHA loan is a good approach for most first-time home buyers. Liang likens 40-year mortgages to a practice similar to car dealerships when financing a car.

“Right now a 30-year FHA loan for $500,000 at 6.7% interest would cost $3500 bucks a month,” Liang explains in a TikTok video.

“What if instead, we allowed a 40-year loan option that would only be $3,280 a month, saving them $220 bucks. Well, with that $500,000 loan over 30 years, they would have paid $661,000 in interest. Over 40 years, they would pay $939,000. Just in interest, folks.”


HUD introduces the 40 year FHA mortgage. On the surface it’s meant to help with monthly payments. However, this now increases the overall interest paid on the entire loan. What are your thoughts? #hud #fha #loan #mortgage #personalfinance

♬ original sound – John Liang

That’s a significant chunk of change going into interest. 

On Twitter, one person said a 40-year mortgage systematically creates a “nation of renters” where you’re paying lenders forever, similar to the feudal systems that were popular in medieval Europe between the 9th and 15th centuries. 

Another offered perspective on just how long 40 years is: “If I were to buy a house today at 25 and not pay it off early, that means I would end up paying on it until I am 65.” 

Another, however, suggested that this isn’t worth getting worked up about because variable loans exist and refinancing on a 40-year loan is possible: 

“Who cares? We have 5, 10, 15, 20, 25, 30-year loans and variable loans. If someone younger wanted a 40-year loan and eventually refinanced once they were more financially stable that makes sense. For instance, buy a house and it appreciates faster compared to the interest paid.”

Would you ever take a 40-year loan to buy a new house?

B. Carlisle

Contributing editor at Wealth Gang. An entrepreneur at heart, he's passionate about meaningful ways to leverage technology and social media for business opportunities and side hustles.