Can a Senior Get a Mortgage?
Yes, lenders do offer mortgages to seniors. When making a mortgage loan, lenders consider many factors to decide whether a borrower qualifies – but age is not one of them. The Equal Credit Opportunity Act prohibits discrimination against credit applicants on the basis of age (along with race, religion, national origin, sex and marital status).
Of course, lenders may ask about age on mortgage applications, but only to collect demographic data, in accordance with the Home Mortgage Disclosure Act (HMDA). This information should be kept confidential and may not be used as a criterion for approving or denying an application.
It’s Different in Poland
As a matter of interest, unlike in America, age limits are used in Poland, and a retiree has a smaller chance of getting a loan. Polish banks set an age ceiling by which the loan must be repaid. At most banks this limit is 70 or 75. The age limit is meant to give the bank some assurance that the borrower will pay off the entire debt during his or her lifetime. That is why people who are already retired must be prepared for a much shorter repayment period. For example, a 60-year-old has a chance of getting a mortgage in Poland, but only for 10–15 years. The older the retiree, the shorter the financing period he or she can get and the higher the monthly payments. In the United States this practice is prohibited.
Is It Harder for Seniors?
Despite laws prohibiting age discrimination, seniors may not find it easy to qualify for a mortgage. Research by the Federal Reserve Bank of Philadelphia found a link between mortgage application denial rates and the age of the borrower. The reason banks turn applicants down is often not age discrimination but the fact that seniors cannot afford to repay the loan and maintain the home.
Regardless of age, a senior must meet the lender’s requirements just like any other customer.
What Counts as Income
Lenders take into account wages, self-employment income and tips. Alimony and child support payments, unemployment benefits, retirement benefits, employer pensions and investment income also count.
A retiree may have built up a sizable investment portfolio or other real estate and realize capital gains, dividends, distributions, interest and rents. Some take regular withdrawals from 401(k), IRA or Keogh retirement accounts. For investment income or retirement account income to be counted toward qualifying you for a loan, you must provide two years of tax returns. If you are already drawing from a 401(k) plan or another source of retirement income, you must show that you will continue to receive that income in the future.
Non-taxable income, such as tax-exempt interest, municipal bonds or annuities, may be counted at 15 to 25 percent more to help you qualify for a loan. Banks treat Social Security benefits the same way if you do not pay tax on them. As you can see, to a bank, tax-free income is worth more than taxable income.
How to Qualify for a Mortgage in Retirement
When seniors apply for a mortgage, banks look at the same financial criteria as for any other borrower, including credit history, debt-to-income ratio (DTI), income and assets. They are not allowed to take age into account.
DTI (debt-to-income) ratio. Calculate your DTI ratio using the following formula:
DTI = (monthly mortgage and other debt payments plus the cost of maintaining the home: property taxes, homeowners insurance and mortgage insurance) / gross monthly income × 100.
Some lenders allow a DTI ratio of 50 percent, but most prefer that you spend less than 45 percent of your monthly income on debt payments, including your mortgage, plus property taxes and homeowners insurance.
Credit score – the higher it is, the lower the interest rate you can get from the bank and the easier it is to qualify for a loan. Most credit scores fall on a scale of 300 to 850 points. With a low score it is very hard to get a mortgage, and the minimum required score depends on the program and the bank. You can check your credit report, on which your score is based, for free at AnnualCreditReport.com.
Assets. A senior with substantial assets will get a loan more easily. If you have a small pension or irregular income but considerable savings and investments, the bank may give you what is called an asset depletion loan. It is a loan like any other, except that the bank will count your liquid assets when calculating your income. Fannie Mae (Federal National Mortgage Association) allows income to be calculated this way under its guidelines, but only from employment-related assets: retirement accounts (401(k), IRA, SEP, Keogh) and severance or a lump-sum retirement payout from an employer – not from ordinary checking and savings accounts. Search online for “Fannie Mae Employment-Related Assets as Qualifying Income”.
Taking Out a Mortgage with Your Daughter or Son
Parents sometimes try to help their children buy a first home by adding their names to the loan application, because the bank then adds the parents’ income to the daughter’s or son’s income. The parents then become co-owners of the home. Note: If they ever apply for public assistance, they will not get it, because on paper they will be wealthy. They will also be turned down for public housing, because they already own a home.
On the other hand, if it is the parents who are buying a home, do not qualify for a loan and ask, say, their son to be listed on the loan application, they must remember that they risk losing the roof over their heads if the son gets divorced or goes bankrupt. You can read more in “Podręcznik ochrony majątkowej” (“The Asset Protection Handbook”).
Should You Take Out a Mortgage in Retirement?
On the threshold of retirement, it is best to pay off your debts rather than take on new ones, because soon your income will drop or will not be as predictable as it once was. Using retirement savings to pay off a mortgage can make it harder to live comfortably in retirement and cover costs such as medical bills or long-term care in old age.
Remember, too, that neither you nor your spouse is immortal. What will happen when one of you dies, and will the widow or widower be able to maintain the home and keep making the mortgage payments? Do you have life insurance large enough to pay off the loan? If the answer is no, then a large mortgage in retirement is not a wise financial decision.
However, taking out a small loan can be a good move for those who can afford a substantial down payment on a home or who want to downsize to a smaller home that is cheaper to maintain. Besides a smaller loan, consider a shorter one – say, 15 years instead of 30. Your monthly payments will be higher, but the interest rate will be lower, and most importantly, you will be debt-free while you are still in full vigor.
Updated October 2026.
