Solutions for addressing housing affordability typically target either demand-side or supply-side challenges.

The market’s affordable housing supply shortage coincided with unprecedented demand-side stimulus during the government’s economic response to the COVID-19 pandemic, driving multiple years of double-digit home price appreciation.

With U.S. homeowners sitting on tens of trillions of dollars of home equity and the national median home price above $400,000, access to tappable equity — either in people’s existing homes or on Wall Street — has strongly determined who can afford to buy single-family homes.

Amortizing mortgages over 50 years — which Federal Housing Finance Agency (FHFA) Director Bill Pulte confirmed his office is considering — hurdles monthly payment barriers by extending typical mortgage terms by 20 years.

An act of Congress would not be needed to amend the 30-year amortization limits for qualifying mortgages (QMs) that adhere to the underwriting guidelines of Fannie Mae and Freddie Mac, says Mike Calhoun, president of mortgage lending at the Center for Responsible Lending, the policy arm of Self-Help Credit Union.

“The statute gives all the relevant agencies the right to revise that,” says Calhoun. “Someone could attempt to revise that and extend QM coverage to 50 years, which would reduce some of the rate differential that you get between 30 and 50 years today.”

‘Stripping of equity’

Wide adoption of the 50-year mortgage could accelerate several concerning trends for typical first-time homebuyers, from the growing number of retirees carrying mortgages to rising household rentership rates.

Historically, a home owned outright, flush with equity, provided retirees with a financial buffer when their income predictably declined but they did not have a housing payment beyond insurance and taxes.

“We’re seeing people roll into retirement with a mortgage and with a much more substantial mortgage,” says Calhoun. “It’s piling onto what’s already a very significant problem of people building up some long-term savings and, particularly, being able to retire.”

The president of the National Association of Mortgage Brokers, Kimber White, told Scotsman Guide that the 50-year mortgage will create the illusion of affordability but not affordable homeownership for the next generation of buyers bearing the equity blowback.

“I call it stripping of equity because it’s going to interest,” says White. As a tool in a broker’s toolbox, he described it as the one no one wants to carry around except for those times when they are glad to have it, “something to get the silly fan battery out.”

With the median age of first-time homebuyers rising to 40 in 2025, according to the National Association of Realtors, a generation of homebuyers in their 20s and 30s are already watching their timeline for building home equity shorten dramatically.

“It’s not going to build generational wealth,” says White. “It’s going be a generational debt.”

Rising rentership rates

The rising median age of first-time homebuyers could mean millions of fewer lifetime purchases for 20- and 30-year-olds unable to start building equity, distorting projections of future home sales for years to come just as real estate’s algorithm for wealth creation reorients from asset appreciation to rental cash flows.

First-time homebuyer purchase contracted to 24% from the middle of 2023 to the middle of 2024 due to persistent affordability barriers, landing at 21% through the middle of 2025.

Investor purchase share, meanwhile, has exceeded pandemic-era peaks on a monthly basis since October of last year, accounting for nearly 1 in 3 homes purchased through the first half of 2025, according to property analytics firm Cotality.

Wedged between their own residence and a nationwide affordable housing shortage running in the millions of units, real estate investors purchase homes for rental portfolios betting that household rentership rates continue to grow as a bottleneck tightens at the bottom of the housing ladder, crimping the homeownership funnel.

The release valve is the single-family rental market, financed by institutional investors, Wall Street lenders and private credit funds, an asset class that captures the mortgage payment not accruing to prospective first-time homebuyers facing delayed entry to the market.

Nearly 90% of real estate investors own five properties or fewer, but mortgage financing for these so-called “mom and pop” landlords flows from investor-purpose loans underwritten to guidelines from major financial institutions who securitize, portfolio or otherwise sell the paper.

Dash Robinson, president of Redwood Trust, which finances single-family rental investors for everything from build-to-rent communities to fix-and-flip projects, tells Scotsman Guide that he sees business opportunity momentum trending toward small balance investor-loan products for a while.

“Rentership in the U.S. is headed back up the past few years just with housing affordability,” he says. “A lot of folks want to rent or can’t own. Those are two big categories and more and more you see those types of demographics not wanting your traditional Class A or B, garden-style apartment. It’s a single-family home with a yard.”

With multifamily housing starts at decade lows, the supply-demand imbalance in the single-family sector has sharpened investor’s focus on single-asset backed investor loans, from debt-service coverage ratio (DSCR) loans for purchasing rentals to residential transition loans (RTLs) used to finance renovation-and-resale projects.

In an evolving market, Robinson says Redwood is “doing much more with banks, which we think is a structurally permanent or at least long-term dynamic where banks are going to need alternative distribution channels besides their own.”

Consumer financial risk

The 50-year mortgage may lower monthly payments for tough-to-qualify borrowers, but it does so by building a diversion channel into borrowers’ monthly mortgage payments.

Monthly principal repayment is diverted into higher interest payments that could raise the lifetime cost of a mortgage by 87%, according to an analysis by CNBC, meaning potentially hundreds of thousands of dollars in interest would no longer accrue as homeowner equity.

The interest-only nature of early 50-year mortgage payments mimics the lease-style single-family rental market, obscuring risks inherent to the difference between owning and renting when life events occur.

Shaky labor markets and forecasts showing sustained home price cooling raise concerns about consumer financial education and the prudence of extending record-high mortgages on homes with softening values to borrowers with next-to-no skin in the game.

“We are likely, given where house prices are today, to see much slower house appreciation over the next decade at least,” says Calhoun from the Center for Responsible Lending. He says he is already observing “many markets” where home price appreciation is not keeping up with inflation or even losing nominal value.

At the same time, he says many homebuyers have lived through an era of home price appreciation trending sharply upward since the post-2008 financial crisis.

Homebuyers overestimate future equity gains, Calhoun says, or count on a near-term refinance to better afford their mortgage when rates go down, which no one can predict with certainty.

“It’s a big worry that a lot of homebuyers will not appreciate that risk,” he continues, citing a conflict of interest in the homebuying process if “those whose livelihood depends upon selling the house and selling the mortgage are not necessarily in the best place to explain to them all the risks that come with taking a 50-year over a 30-year.”