Key Takeaways
- Retirees can qualify for a mortgage using Social Security, pensions, retirement account withdrawals, and investment income.
- Asset depletion loans let you qualify by converting your savings into a calculated monthly income stream.
- Lenders cannot deny you a loan based on age, only on your ability to repay.
- Strong assets and credit can make retirement homebuying very achievable, even without a traditional paycheck.
Retiring does not mean the end of your borrowing power. Lenders can count Social Security, pensions, and even your retirement savings as income. There are also specialized loans built for asset-rich, income-light borrowers. Here is how to qualify for a mortgage in retirement.
What income counts in retirement?
Lenders can use Social Security benefits, pension payments, annuity income, and regular withdrawals from retirement accounts, along with dividends and interest from investments. For income like Social Security that is not taxed, lenders may gross it up, counting it as a higher amount, which can help you qualify. Documentation like award letters, 1099s, and account statements supports these sources.
What is an asset depletion loan?
An asset depletion or asset-based loan lets you qualify using your savings even if you draw little formal income. The lender divides your eligible liquid assets by a set number of months to create a hypothetical monthly income for qualifying. This is ideal for retirees who have substantial savings but modest reported income, letting the nest egg do the qualifying work.
Can a lender deny you because of your age?
No. The Equal Credit Opportunity Act prohibits denying a mortgage based on age. Lenders can only consider your ability to repay. A well-qualified retiree with steady income sources or strong assets and good credit stands on equal footing with any other borrower, regardless of a shorter life expectancy or planned retirement.
How can retirees strengthen their application?
Keep clear records of all income sources, maintain strong credit, and consider a larger down payment to lower the monthly payment and improve approval odds. If most of your wealth is in assets rather than income, ask about asset depletion programs. Reducing other debts before applying also helps your debt-to-income ratio, which matters as much in retirement as at any age.
Frequently Asked Questions
Can I get a 30-year mortgage as a retiree?
Yes. Lenders cannot limit your loan term based on age or life expectancy. If you qualify on income or assets and credit, you can obtain a standard 30-year loan like anyone else.
Do retirement account withdrawals count as income?
They can, if you document a consistent, sustainable withdrawal pattern that is likely to continue. Lenders want to see that the distributions will last long enough to support the payments.
Is a reverse mortgage the same thing?
No. A reverse mortgage is a separate product for homeowners 62 and older that lets you draw on existing home equity. Buying a home in retirement with a traditional or asset depletion loan is different and is what most retiree buyers use.
One more path if you are 62 or older: a reverse mortgage (HECM), including HECM for Purchase, which lets you buy with a large down payment and no required monthly principal and interest payment.
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Working through this in Colorado? I’m David Silva, a mortgage loan officer based in Westminster, CO (NMLS 1352284), licensed in Colorado, California, Georgia and Texas. Take a look at every loan program I offer or first-time buyer help — or send me your scenario and I’ll tell you straight whether it works.
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