40-Year Mortgage and VA Loans: What Veterans Should Know

Most VA borrowers choose a 30-year mortgage. But recent headlines about 40-year loan terms have raised questions about whether longer repayment options are now available to veterans.

While 40-year mortgages do exist in limited situations, they are not offered as standard VA purchase loans. The key distinction is between new 40-year mortgages and modified loans that are extended to 40 years due to financial hardship.

Here’s what veterans should know about 40-year mortgages, current VA limits, and recent Ginnie Mae changes.

What is a 40-Year Mortgage?

Most homebuyers use 30-year mortgages, making monthly payments that gradually reduce principal and interest over three decades.

Shorter terms — such as 10-, 15-, 20-, or 25-year loans — increase monthly payments but reduce total interest paid and allow borrowers to build equity faster.

A 40-year mortgage does the opposite. By extending repayment:

• Monthly payments decrease
• Total interest paid increases
• Equity builds more slowly

In short, you pay less each month but significantly more over the life of the loan.

15 vs. 30 vs. 40 Years

To demonstrate the effects of changing loan terms, we’ll use an example. Assume you want to secure a $250,000 mortgage at 3.5% and want to compare the differences between 15-, 30-, and 40-year mortgages.

• 15-year loan
  Monthly payment: $1,787
  Total interest: $71,697

• 30-year loan
  Monthly payment: $1,123
  Total interest: $154,140

• 40-year loan
  Monthly payment: $968
  Total interest: $214,868

While the 40-year term lowers the payment, it costs about $60,000 more in interest than a 30-year mortgage over the full term.

How Can I Get a 40-Year Mortgage?

In 2013, the Consumer Financial Protection Bureau (CFPB) changed mortgage rules so that 40-year loans no longer qualify as “qualified mortgages.” That makes them harder for lenders to sell to investors.

Finding a lender willing to originate one is challenging. But these loan products do exist if you’re willing to look. Some lenders still offer 40-year loans as nonqualified mortgages (non-QM), but they are less common and may involve higher risk or stricter underwriting.

Can You Get a VA Loan with a 40-Year Mortgage?

No. VA loans cannot be originated with a 40-year term.

The Department of Veterans Affairs limits VA mortgages to 30 years and 32 days, and the term cannot exceed the remaining economic life of the property.

The VA has historically avoided longer terms due to increased risk to borrowers and lenders.

Ginnie Mae Changes and the 40-Year VA Loans

Ginnie Mae (Government National Mortgage Association) guarantees mortgage-backed securities backed by government loans like FHA and VA mortgages. When Ginnie Mae changes its pooling rules, it can influence how lenders structure loans.

Recently, Ginnie Mae announced it would allow modified 40-year mortgages into its mortgage pools. This applies only to loan modifications, not new loan originations.

In other words, borrowers already struggling with a 30-year mortgage may have their loan extended to 40 years to reduce monthly payments and prevent foreclosure. This change does not create new 40-year VA purchase loans.

How Will This Ginnie Mae Change Affect VA Loans

Ginnie Mae has stated that FHA and VA will determine how to implement these modification options.

VA officials have acknowledged the change and indicated that guidance would follow after foreclosure-related moratoriums ended.

For now, VA borrowers should not expect new 40-year purchase loans — but some distressed borrowers may see expanded modification options.

Final Thoughts

In other words, don’t expect the VA to begin offering new, 40-year VA loans anytime soon. But depending on how the Department of Veterans Affairs adapts to Ginnie Mae changes, current VA borrowers may be able to refinance their loans into 40-year terms.