How to Qualify for a Mortgage as a Retiree

by Maurie Backman | Updated July 19, 2021 - First published on July 4, 2021

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A senior couple sit on the couch talking to a real estate agent

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Just because you're retired doesn't mean you can't buy a home.

Many people aim to have their mortgages paid off by the time they retire. Others sell their homes in retirement and go on to rent instead.

But what if you're the opposite, and you decide to buy a new home or go from renting to owning once your time in the workforce comes to an end? You may be wondering how you'll qualify with a mortgage lender in the absence of having a job. But actually, getting a mortgage as a retiree isn't all that different from getting one while you're working. Here's how to qualify for a home loan during retirement.

1. Have a healthy income stream

Though some retirees opt to work part-time, many don't work at all. So how do you show proof of income if you don't actually work? You'll just need to show a lender that you have money coming in each month, even if it's not coming in typical paycheck form.

Seniors are generally entitled to benefits from Social Security. Plus, you may have:

  • A pension that pays you regularly
  • Investment income from a brokerage account
  • A retirement plan, like an IRA, that you can take regular withdrawals from

All of that counts as income for mortgage approval purposes, because it shows that you're capable of making payments on a loan.

2. Have great credit

Having a solid credit score is essential to getting approved for a mortgage -- no matter your age. The minimum credit score for a conventional mortgage is 620, but it's better to aim higher than that. In fact, if you want to snag the best mortgage rates available, you should aim for a score in the mid-700s or higher.

If your credit score could use a boost, the best thing to do is to pay all of your bills on time and also pay off some existing credit card debt. Additionally, using the three major credit bureaus to check your credit report for errors -- and correcting those that work against you -- could help your score increase.

For more information, check out our guide to learn how to build credit fast.

3. Keep your debt to a minimum

Another factor mortgage lenders look at when assessing loan candidates is their debt-to-income ratio. This is a measure of how much outstanding debt you have relative to your income. It's important to keep this ratio on the low side because the higher it gets, the more of a risk you become. And if you have a lot of debt already, your lender may be concerned that you won't manage to keep up with your mortgage payments on top of your existing loans. You can reduce your debt-to-income ratio by paying off existing debt, or by boosting your income. This might mean having to take on a part-time job, even if you do so temporarily.

You might think that qualifying for a mortgage is more difficult as a retiree, but that won't necessarily be the case. Just do your best to have some type of income stream, raise your credit score as much as possible, and shrink your debt load so a lender is more inclined to give you a home loan.

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