How a 40-Year Mortgage Works
Longer term
Spread payments over 40 years
Stretching your loan to 40 years lowers your monthly principal and interest, often by about 5–10% compared with a 30-year loan at the same rate.
40-Year Mortgages
40-Year and Interest-Only Mortgages
Stretch your loan to 40 years to lower your monthly payment, with optional interest-only periods.
Lower payments
Lower payments
Lower payments
Lower payments
Lower payments
Lower payments
40-Year Mortgage Guidelines
Typical requirements across our lenders. Apply if you're close and we'll find a fit.
Credit Score
Most programs start at a 660 credit score. Higher scores earn better pricing.
Property Type
Primary homes, second homes, and investment properties.
DTI Limits
Debt-to-income limits are usually up to 50%.
Loan Limits
Loan amounts from $75,000 up to $3 million.
Reserves
Expect to show several months of payments in reserves.
Down Payment
Varies by credit score, property type, and loan size.
Mortgage Insurance
These non-QM loans have no mortgage insurance.
Interest-only option
Pay interest only at first
Some 40-year loans start with an interest-only period, usually up to 10 years. Your payment is lower at first, then rises when principal payments begin.
The tradeoff
Lower payment, more interest
A longer term means you pay more total interest and build equity more slowly. It works best when monthly cash flow matters more than paying the loan off fast.
Paying Ahead
Prepay to shorten your loan
Extra payments cut your interest cost and shorten the loan. We'll tell you whether a prepayment penalty applies before you choose.
Who it's for
Buyers focused on cash flow
40-year loans help buyers in high-cost markets, self-employed borrowers, and investors who want a lower monthly payment.
How It Works
Compare Terms
We show your payment and total interest on a 30-year and a 40-year loan side by side.
Get Pre-Approved
Apply and upload your documents. We compare lenders for the best 40-year pricing.
Find Your Home
Shop with a pre-approval that reflects your lower payment.
Close Confidently
We'll guide you from contract to closing day.
Do's and Don'ts
Do
Compare Side by Side
Look at the payment and total interest on both terms before you choose.
Budget for Closing Costs
Expect to pay around 2-3% of the home’s price in closing costs.
Plan for the Payment Change
With interest-only, know when principal payments begin and what your new payment will be.
Don't
Open New Credit Accounts
Taking on new debt can impact your credit score and loan approval.
Make Large Unverified Deposits
Lenders ask you to document large deposits, so keep your down payment funds in your accounts.
Ignore the Total Cost
A lower payment costs more over time. Make sure the tradeoff fits your plans.
40-Year vs. 30-Year
How a 40-year loan compares with a 30-year and an interest-only option.
40-Year
30-Year Fixed
40-Year Interest-Only
Monthly payment
Lower
Baseline
Lowest at first
Total interest
Higher
Lower
Highest
Equity build-up
Slower
Faster
None during interest-only period
Loan type
Non-QM
Qualified mortgage
Non-QM
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Sukesh was great from start to finish. I first reached out to him in June of 2023 and he got me pre-approved same day. I ended up putting in an offer on a new construction in July and Sukesh was on it every step of the way. He was always available, didn't matter the time of the day. He was also very knowledgeable, answered all of my questions and offered the best suggestions with concrete reasoning to back it up. I ended with a rate lower than market and I couldn't have been happier. My home was eventually completed in March 2024 and the closing process was fast and smooth. With Sukesh there's no such thing as a standard 30 or 45 day close, it felt more like one week close. I highly recommend Sukesh and Altgage, you won't regret it.
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I had an excellent experience working with Sukesh Shekar at Altgage Inc. From start to finish, he was professional, knowledgeable, and incredibly helpful. He took the time to explain every step of the process, and helped me through a tricky signing day with an ex. I felt confident in my loan options. His dedication and attention to detail made the entire experience smooth and stress-free. I highly recommend Sukesh to anyone looking for a reliable and supportive loan officer.
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I wanted to thank and appreciate Sukesh for his help and support starting from the loan application process till closing of our new home. Sukesh is very transparent and provided us with eligible incentives that helped in lowering our closing costs.
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Sukesh was really awesome throughout the whole process of purchasing our new home in Boulder county Colorado. We got the lowest rates possible, and he was always looking for additional ways for us to save money. Everything was super fast, and super easy. Communication was always clear and quick. We highly recommend Altgage!
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Lower Your Monthly Payment
Compare a 40-year loan with a 30-year side by side.
Recent Articles
Guides to lowering your monthly payment.
Frequently asked questions
You’ve got questions, we’ve got answers
A home loan repaid over 40 years instead of 30. The longer term lowers your monthly payment but increases the total interest you pay.
No. Qualified mortgages are capped at 30 years, so 40-year loans are non-QM. Rates are usually somewhat higher than a standard 30-year loan.
For the first several years, usually up to 10, you pay only interest. After that, your payment rises to cover principal over the remaining term.
Yes. Extra payments shorten the loan and cut interest. Ask whether a prepayment penalty applies before you lock your rate.
