Mortgage for Retirees: How to Qualify Without a Paycheck in Maine or Florida

By Travis Penny, Senior Mortgage Broker, NMLS 1649161.

Most of the retirees who call me assume they can't get a mortgage because they don't get a paycheck anymore. That isn't how it works. A lender needs to see income that is reliable and likely to continue, and most retirement income is exactly that. This guide covers every way a retiree's income can count, in plain English. For the program that turns retirement savings into income, see my asset depletion loans page.

Your age can't be used against you

The Equal Credit Opportunity Act bars lenders from denying you, or offering you worse terms, because of your age. A 72 year old can take a 30 year mortgage. The lender may ask whether income will continue, such as how long an IRA will last at your withdrawal rate, but not how long you will live.

Income that counts

• Social Security. Your award letter plus proof it hits your account. Nontaxable portions can often be grossed up, which raises the income used to qualify.
• Pensions and annuities. A pension statement or annuity contract showing the monthly amount and that it continues.
• IRA and 401(k) withdrawals. Regular distributions you're already taking can count. Lenders generally want to see the account can keep paying for at least three years.
• Investment income. Dividends and interest with a two year history on your tax returns.
• Rental income from property you own.

Add them up, and many retirees qualify more easily than they expected.

When income on paper is low but savings are high

Plenty of retirees live on savings and take only small withdrawals for tax reasons. That's where asset depletion helps. On one program I have access to, an old 401(k) or IRA balance divided by 36 can count as monthly income, with no minimum age and no requirement to start distributions. Brokerage and bank accounts can count on asset depletion programs too. My asset depletion mortgage guide walks through how those accounts are figured.

Maine and Florida situations I see often

• Snowbirds buying a Florida winter home while keeping the house in Maine. See my snowbird page.
• Downsizers buying a smaller home before selling the family house. My buy before you sell page covers how the old home's payment can be offset without a lease.
• Retirees moving south for good, where homestead and insurance costs matter. Start with my Maine to Florida relocation page.

What to gather before you apply

1. Social Security award letter for the current year.
2. Pension or annuity statements.
3. Two months of statements for every bank, brokerage and retirement account.
4. Two years of tax returns if you have investment or rental income.
5. A rough budget for taxes, insurance and any association dues on the new home.

FAQ

Can you get a mortgage after you retire?

Yes. Lenders can't deny you for your age. They look at documented retirement income, credit, assets and the home, like any other buyer.

Can I get a 30 year mortgage at 70?

Yes. Federal fair lending law bars lenders from turning you down because of age, so a 30 year term is available to retirees on the same terms as anyone else.

Does Social Security count as income for a mortgage?

Yes. Social Security retirement and disability income can count with an award letter and proof of receipt. Nontaxable portions can often be grossed up.

Can I qualify on my IRA if I'm not taking withdrawals?

On one asset depletion program I have access to, an old 401(k) or IRA balance divided by 36 can count as income, with no age or distribution requirement. Not everyone will qualify.

Should I pay cash or take a mortgage in retirement?

It depends on your taxes, your investments and how much cash you want on hand. A mortgage keeps money invested and liquid; cash removes the payment. Talk it through with your financial advisor.

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Tell me what comes in each month and roughly what you have saved, and I'll tell you which way of counting it gets you the home you want. Start your application, or reach me through my contact page.

Travis Penny, Senior Mortgage Broker, NMLS 1649161 | Vision Mortgage, NMLS 1286953 | Residential loans in Maine and Florida.