To figure this out, you have to imagine that we are on the gold standard and there is no federal reserve to create interest rates. The only people that loan money are people that have money. No fractional reserve banking or any government interference. So...you have $100k to loan to someone for a mortgage. Whats a fair interest rate that would make you want to loan money to someone that is competative with other people that would be loaning money. Remember...we are only using gold & silver, so there is next to no inflation. Well maintained houses do not go up or down in value. I would say between 10-20% depending on amortization and 20 years would be the absolute maximum amortization.