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“Can I even get a mortgage now that I’m retired?”
I hear some version of that question more often than you might think. Sometimes it’s said quietly, almost as if the answer is already no.
It usually isn’t.
Retirement changes how your income looks on paper. It doesn’t automatically close the door to buying a home. For many of the people I work with, retirement is exactly when they’re finally free to choose where they want to live, whether that means right-sizing, moving closer to family or spending winters somewhere they love.
So let’s talk about how lenders actually look at it.
Your Age Isn’t the Reason a Lender Can Say No
The federal Equal Credit Opportunity Act protects you here. As the Consumer Financial Protection Bureau explains, “A lender generally can’t deny your loan application or charge you higher interest rates or fees because of your age.”
That same guidance says lenders can’t discount income from a pension, an annuity or another retirement benefit, or from Social Security. What they can do is look at how much the income is and whether it’s likely to continue.
That distinction matters. The question isn’t how old you are. It’s whether your income and resources support the loan.
Retirement Income Counts
When you’re working, a lender looks at your paycheck. In retirement, your income may come from several places instead:
- Social Security
- a pension
- annuity payments
- regular distributions from retirement accounts
- part-time work, consulting or rental income
A lender will want documentation for each source, and in some cases evidence that it will continue. Gathering those statements early can make the process much smoother.
Your Savings May Count, Too
Here’s the part many retired buyers don’t know.
Some people have substantial savings or retirement accounts but a modest monthly income. Some loan guidelines allow a lender to turn eligible assets into a monthly qualifying income figure.
For example, Fannie Mae’s Selling Guide describes one approach in its section on using assets as qualifying income. The lender takes eligible assets, subtracts any early-withdrawal penalty and the money needed for the down payment, closing costs and reserves, and divides what’s left over the length of the loan.
There are rules about which accounts qualify and how the loan can be structured, and other lenders and programs may handle assets differently. That’s why I won’t tell you which approach fits you. A qualified lender can look at your actual accounts and explain your options.
What I want you to know is simply this: if your savings are strong, a modest monthly income may not be the end of the conversation.
Paying Cash Is Another Option, Not a Requirement
Some retired buyers pay cash, especially when they’re selling a home they’ve owned for many years. That can make an offer very attractive to a seller.
But cash isn’t the only path, and it isn’t automatically the best one. Some buyers prefer to keep more of their savings invested or available. That’s a decision for you and your financial advisor, and it’s worth having that conversation before you start touring homes.
The Order I’d Recommend
If you were my client, here’s what I’d recommend, and why.
First, talk with a lender who regularly works with retired buyers, before you fall in love with a house. Bring your income statements and account statements, and ask how they would look at your situation.
Second, talk with your financial advisor about how much you want to put down and how much you want to keep available.
Then we can search with confidence, knowing the price range and monthly cost that fit the life you want, not just the loan you could get.
If you’re also selling a home, the timing matters too. I wrote about that in Thinking About Selling Your Rio Verde Home?, and about the full cost of owning a home here in The Price Is Only Part of the Purchase. For financing options more broadly, see Mortgage Rates Are Above 7%, But Arizona Home Buyers Have More Financing Options.
This Is Your Adventure
Retirement isn’t the end of making big decisions. For many people, it’s the first time in decades the decision is truly theirs.
If you’re thinking about a move to Rio Verde, Tonto Verde, Trilogy at Verde River, Fountain Hills, North Scottsdale or Troon North, I’d be happy to help you think it through and introduce you to lenders who understand retired buyers. Your next adventure starts with one conversation.
Monica Condomitti
Luxury Real Estate Advisor
MC Luxury Real Estate at Coldwell Banker
Rio Verde / North Scottsdale, Arizona
www.MonicaCondomitti.com
480-822-9553
This article is general information, not financial or lending advice. Loan programs and requirements change. Talk with a qualified lender and your financial advisor about your situation.
