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When you retire, and are living on just retirement, will the banks still loan you money to purchase a home? Dumb question maybe, but I always wondered how that worked. Like you are 65 and you move, you have SS, and a pension from your job, and some investments. Would you even be able to get a loan at that age? Would they require a large down payment? Would it be limited on the amount of time (years) you could barrow? Now I guess it would come down to the amount you want to barrow, and how much total income you have from retirement. My parents built their dream home when they retired. They were able to put a very large down payment, and only barrowed a small amount and were able to pay it off rather quickly. They saved, and had inherited money which helped them. For me, we'll have a house to sell that will mostly be or will be paid off. So we would have that to put for large down payment, but will probably have to barrow some as I know the next house will most likely cost a little more than the one we have now.
Makes sense and yes you can get a loan without a major down payment. Your SS and pension are more secure than a job and you have money invested and minimal debt. We did it on a second home
The Equal Credit Opportunity Act (ECOA) prohibits credit discrimination on the basis of race, color, religion, national origin, sex, marital status, age, or whether you get public assistance. Creditors may ask you for most of this information in certain situations, but they may not use it when deciding whether to give you credit or when setting the terms of your credit. They are never allowed to ask your religion. Everyone who participates in the decision to grant credit or in setting the terms of that credit, including real estate brokers who arrange financing, must follow the provisions of the ECOA.
Lenders don't care what your age is. You can get a mortgage when you're ninety if the finances are there. All they care about is if you qualify for the loan.
FHA mortgages can be had 3.5 % down plus mortgage insurance, VA loans of 0% down, conventional loans with 5-20% down ( depending on the product)
Figure out how much you want to spend, then go speak to a few mortgage lenders to get an idea of what is out there for you and what they will lend.
Over 65 isn't treated any differently, as long as you have a steady, reliable income stream.
FYI, for qualifying purposes, lenders around here gross up your SS benefit 25% (presumable b/c your taxes in retirement are less), add to that your pension, any RMDs from retirement funds, etc. So, if your SS is $2k/mo, lender is using $2,500.
Down payment can be dependent on property type. Usually 20% without PMI. Certain government programs require less. Interest rate varies by type of property and term of loan.
Essentially, your mortgage payment, taxes and insurance shouldn't exceed 25-28% of your gross income. That figure can be stretched to 30-32% if you have no other fixed debt - and, in some cases, even higher.
Most retirees usually have a pretty good down payment.
Most lenders underwrite loans with a goal of selling them so you must fit into their profile. Income from your IRA is only counted if it provided in a repeated fashion controlled by a financial institution, but if you handle the transfers as needed it will not qualify as income. I had to change the way I transferred funds in order to jump through this hoop for a simple refinance.
Thank you. This is all good information. I think it's important in retirement (and anytime really) to pay off loans as quickly as possible. Our debt ratio is low now, since we don't buy things on "time" much, and pay off credit card balances each month (if there is a balance). We also buy our cars with cash, or make sure it's a small enough loan that it's paid off within a short period of time. My husband qualifies for VA loans, so that would be zero down. We purchased our current house for less than the amount we qualified for. Which gave us a very low house payment. But when we retire we'd like to maybe build a house on some land, if we can afford it. So this house would be part of the down payment to get the loan debt amount lower.
Lots of mortgages are given to those over 65. No one fits into the "box" banks will have us led to believe exists. Every situation is different.
As someone pointed above, FHA will lend with 3.5% down. There is also a new conventional product (My Community) with 5% down, however, if you can put down more, that's great also.
There are also renovation loans out there where we lend based on the final "subject to" price.
I am proof that there are loans for retirees. At age 67, I got a 30 year mortgage for well over $300k with 30% down. 20% down is more standard but I got a slightly better rate at 30%. My credit was not perfect and I had to clear up some errors. I had deferred social security and had to start taking payments as part of the qualification.
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From a mortgage broker in Florida
