Whether you’re looking for help financing the Victorian fixer-upper of your dreams, tapping the value of the house where you’ve been for years, or taking advantage of rates that are still at near-historic lows, you might be surprised at how mortgage lenders rate older borrowers.
• Age doesn’t matter. Counterintuitive as it may sound, your loan application for a mortgage to be repaid over 30 years looks the same to lenders whether you are 90 years old or 40. A web of federal civil rights laws, including the Equal Credit Opportunity Act and the Fair Housing Act, make it illegal for a creditor to discriminate on the basis of an adult’s age.
• Being debt-free may pose a problem. Greg McBride, chief financial analyst at Bankrate, says an unexpected stumbling block can be that you don’t have a credit rating if you haven’t recently been in debt. “It used to be that you looked to retire debt-free. You may have a great credit history, but if you’re out of the credit game now—debit cards don’t count, and you’ve paid off your car loan, you’ve paid off your mortgage—there’s no recent activity to give you a score. It’s one of the reasons to use a credit card even if you pay it off completely each month, just so you have active credit lines to show a current credit history.” A strong credit score can mean you’ll be approved with a better borrowing rate.
• Retirement income is still income. Mortgage applications usually start with questions about income to document how you will make monthly payments. In place of the employed person’s pay stub and W-2, retirees can provide a Social Security or pension award letter. The sources of income, unlike your credit score, do not affect the calculation of how much debt you can carry, according to Bill Banfield, executive vice president of Capital Markets at Quicken Loans: “We don’t have different guidelines based on profession or employment.” Fannie Mae and Freddie Mac, which largely set the standards for the secondary market in mortgages, usually require that monthly housing and debt costs (including real estate taxes and homeowner’s insurance) account for no more than 50 percent of monthly income.
• Your savings can work as income. Specialized mortgage lenders often associated with stockbrokers like Merrill Lynch and JP Morgan cater to the affluent with alternative forms of underwriting of some of the same kinds of 15- and 30-year mortgages. If you have investments, ask the firm where they are held about mortgages. Morgan Stanley Private Bank, for instance, has an Asset Pro-Forma Method for attributing income from investment accounts, so that wealth can qualify you for a mortgage even if you’re without income. A million-dollar investment account with stocks and bonds, for instance, could typically be calculated as the equivalent of $35,000 a year in income (assuming 5 percent of annual income, after a conservative 30 percent discount for market risk). The borrower is not required to cash in these assets—the investments are merely used to demonstrate an ability to make mortgage payments. Another industry term for this kind of loan is “asset depletion mortgage.”
These assumptions are actually more conservative than Fannie Mae and Freddie Mac guidelines, which are also used by mortgage lenders industry-wide. The Fannie and Freddie rules can qualify the same million-dollar investment account—it could be retirement savings in an IRA or a 401(k)—toward a “three-year continuance of income.” Using this math, the million-dollar account, divided into three years, is the equivalent of an annual income of $233,333 ($1,000,000 less 30 percent market-risk discount, divided into three years).
• You don’t need to put down 20 percent. “The myth is still out there,” says Quicken’s Banfield. “But Fannie and Freddie programs allow for mortgages that are 97 percent of a home purchase. FHA mortgages go to 96.5 percent. The Veterans Administration will do 100 percent.”
• Reverse mortgages can be legit. They can be a lifeline for retirees who need to tap home equity for living expenses, and, according to Svenja Gudell, Zillow’s chief economist, “Boomers have, on average, just over $125,000 in home equity.” A “cash out” mortgage or home equity line of credit can also tap this value. But instead of paying down the loan over time—as in a typical 15- or 30-year mortgage—the reverse mortgage loan compounds, with the growing loan to be repaid when the borrower moves out or dies. “Bad actors have given reverse mortgages a bad name,” says Bankrate’s McBride, “but the product is sound.” Borrowers must be at least 62 years old and are required to go through reverse mortgage counseling. Players who offer Home Equity Conversion Mortgages (HECM) through the Federal Housing Administration include Quicken Loans’ One Reverse Mortgage. CEO Gregg Smith says, “the home should be a key asset in planning for retirement.”
FAQs
Whether you're looking to downsize into the upgraded home of your dreams, refinance to pay off your home a little quicker, or looking for some extra cash to help fund your retirement, we want you to know that nobody is ever too old to get approved for a mortgage loan. Age is never a factor in loan approval.
Can a 70 year old get a 30 year mortgage? ›
And if you're looking to buy a house, you might wonder if you can still land a 30-year mortgage when your age is north of 60. The short answer: absolutely! Luckily, whether you're 25 or 70, lenders look only at certain numbers when reviewing a mortgage application.
At what age should you no longer have a mortgage? ›
To O'Leary, debt is the enemy of any financial plan — even the so-called “good debt” of a mortgage. According to him, your best chance for long-term financial success lies in getting out from under your mortgage by age 45.
What is the oldest age you can get a mortgage? ›
Typically, this is either:
- Your age when you take out a new mortgage, with the limit ranging from around 65 to 80.
- Your age when the mortgage term ends, with the limit ranging from about 70 to 85.
Yes. There is no age limit to a mortgage application. If you have a substantial down payment and a steady income (which can include pension and Social Security payments), you have a good chance of approval regardless of your age.
Is it hard for a 70 year old to get a mortgage? ›
At the same time, loan rates increase steadily with age, peaking for new borrowers over the age of 60 and 70. The difference of interest rates is less pronounced, as lenders charge older applicants modestly higher interest rates while they reject older applicants much more often, but both trends are still very real.
Can you be denied a mortgage based on age? ›
A lender generally can't deny your loan application or charge you higher interest rates or fees because of your age.
At what age should you be debt free? ›
Carrying the burden of debt is the way of life for many. According to Experian, as of the third quarter of 2023, the average American held $104,215 in debt.
Should an elderly person pay off their mortgage? ›
There may be good reasons to pay off your mortgage. It can save you thousands of dollars in interest, depending on the current size of your debt, and give you peace of mind that no matter what happens in the future, you own your home outright.
How can I retire without a mortgage? ›
A guaranteed way to retire without a mortgage is to sell your current home at a profit and use the proceeds to rent a place to live in during retirement. Although it might seem as if you'd just be writing a check to a landlord instead of a lender, the differences between renting and owning can be considerable.
Being debt-free — including paying off your mortgage — by your mid-40s puts you on the early path toward success, O'Leary argued. It helps you free yourself from financial obligations at a time when your income is presumably stable and potentially even growing.
Can I get a mortgage if I am retired? ›
The Equal Credit Opportunity Act means creditors cannot discriminate against you based on your age or life expectancy. However, you may find it harder to qualify for a loan with your retirement income since your retirement income may be lower than your working income.
Is a 70% chance of getting a loan good? ›
See loan deals and your chances of approval. Eligibility is scored as a percentage – over 70% shows a strong chance of approval. We'll also show deals where you're pre-approved.
Is buying a house at 50 worth it? ›
You may want to stick to a shorter-term loan
And that may not be ideal. So if you're buying in your 50s, a good bet may be to sign a 15-year mortgage. If you stick to that schedule, it's more than conceivable that your home will be paid off in full before your career comes to an end.
Does it make sense to buy a house at age 60? ›
The bottom line: It depends on your comfort level with debt. If you feel like you can comfortably make a monthly mortgage payment, whether you're collecting Social Security or living on a fixed income (maybe even a robust one), then taking the home loan may be the right choice.
Can a 70 year old couple get a 30-year mortgage? ›
You Can Get a 30-year Mortgage at Any Age
The lender may not deny a loan because they don't think you'll live long enough to pay it off. But the law addresses more than just the age at which you apply. ECOA also prohibits lenders from denying a loan for other reasons that may be related to age.
At what age do banks stop giving 30-year mortgages? ›
Age doesn't matter. Counterintuitive as it may sound, your loan application for a mortgage to be repaid over 30 years looks the same to lenders whether you are 90 years old or 40.
Which type of mortgage is typically offered to seniors? ›
A reverse mortgage is designed to allow seniors to access the equity in their home as cash paid by the lender. With this option, you can receive the funds in a lump sum or opt for monthly payments over a term or as long as you live in the home.
Can you get a mortgage with only social security income? ›
Mortgage lenders can't deny you a loan just because your only income comes from Social Security. However, your Social Security payments will need to be high enough to cover a mortgage payment without pushing your debt-to-income ratio too high. Otherwise, you could be denied a loan.
What percentage of 70 year olds have a mortgage? ›
Mortgage debt remains uncommon among homeowners age 65-plus relative to their younger counterparts; in fact, the fraction of homeowners age 65-plus who had a mortgage in 2022 (34 percent) was less than half that of homeowners under age 65 (70 percent) 3.
