Yes, a retired person can get a mortgage. Federal law bars lenders from denying credit because of age, and retirement income counts toward qualification just as employment income does for a working borrower. What changes is the paperwork: instead of pay stubs and a W-2, you document Social Security, pensions, retirement account withdrawals, annuities, and investment income — and if those streams aren’t enough on their own, you can convert your liquid assets into a calculated monthly income figure.
Age Cannot Be Used Against You
The Equal Credit Opportunity Act makes it illegal to deny credit based on a borrower’s age, provided the borrower has the legal capacity to enter a contract.1Office of the Law Revision Counsel. 15 USC 1691 – Scope of Prohibition Regulation B, which implements the Act, adds that a lender cannot discount or exclude income simply because it comes from a pension, annuity, or other retirement benefit.2eCFR. 12 CFR Part 1002 – Equal Credit Opportunity Act (Regulation B) Lenders also cannot assume your income will fall because you’ve reached a traditional retirement age. They have to look at your actual finances.
What Income Counts Toward Qualifying
Lenders want income that is stable, documented, and likely to continue. Retirees usually piece together qualifying income from several sources.
Social Security and Pensions
Social Security is the most common qualifying income for retirees. Lenders verify it through your Social Security Administration award letter, your SSA-1099, or bank statements showing regular deposits. Pension income works the same way, documented with a retirement award letter or benefit statement, an IRS 1099-R, or bank statements.3Fannie Mae. B3-3.1-09, Other Sources of Income Because both continue indefinitely, lenders generally treat them as stable without asking for proof of duration.
Retirement Account Withdrawals
Withdrawals from a 401(k), IRA, SEP, or similar account count, with one added requirement: the lender must verify that distributions will continue for at least three years from the date of application.4Fannie Mae. B3-3.1-01, General Income Information A consistent withdrawal history plus enough remaining balance to sustain those withdrawals will satisfy it.
Annuities, Investments, and Rental Income
Annuity payments qualify when you can document the contract and show a history of receipt. Dividends, interest, and capital gains are typically averaged over your last two tax returns, and variable returns may be reduced to account for market swings. Rental income counts too, but only 75 percent of gross monthly rent is used, with the other 25 percent set aside for vacancies and maintenance.5Fannie Mae. B3-3.1-08, Rental Income You’ll usually need lease agreements and Schedule E from your tax return.
Grossing Up Nontaxable Income
Because a portion of Social Security benefits is not subject to federal income tax, lenders can increase that nontaxable portion by 25 percent when calculating qualifying income.4Fannie Mae. B3-3.1-01, General Income Information Under Fannie Mae’s guidelines, 15 percent of Social Security is treated as nontaxable by default, with no additional documentation required.
The math: on $2,000 a month in Social Security, $300 (15 percent) is treated as nontaxable. That $300 is grossed up by 25 percent, adding $75, so your qualifying figure becomes $2,075. Modest on its own, useful stacked across multiple nontaxable streams. Other nontaxable income, such as certain disability payments, can be grossed up by the same 25 percent if you can verify the nontaxable status.
Using Assets When Income Is Short
If your monthly income doesn’t reach what the lender needs, asset depletion may close the gap. The lender converts eligible liquid assets — brokerage accounts, savings, certificates of deposit, and retirement accounts — into a calculated monthly income by dividing the total by the number of months in the loan term.6Fannie Mae. B3-3.1-09, Other Sources of Income – Section: Employment-Related Assets as Qualifying Income
For a 30-year loan, that’s 360 months. A retiree with $500,000 in eligible assets generates roughly $1,389 of calculated monthly income. Before dividing, the lender subtracts your down payment, closing costs, and required reserves, so only the leftover balance produces income.
For IRAs and 401(k)s, the lender also subtracts any early withdrawal penalty that would apply if the account were fully distributed at the time of calculation. In Fannie Mae’s example, a $500,000 IRA subject to a 10 percent penalty is reduced to $450,000 before the math begins.6Fannie Mae. B3-3.1-09, Other Sources of Income – Section: Employment-Related Assets as Qualifying Income Retirees 59½ and older are past the penalty age, so their retirement accounts can be counted at full value, minus only the down payment, closing costs, and reserves.
Debt-to-Income Limits
Your debt-to-income ratio is the share of your gross monthly income taken up by all recurring debt payments, including the proposed mortgage. For conventional loans:
- Manually underwritten loans cap the ratio at 36 percent of stable monthly income, or up to 45 percent if you meet additional credit score and reserve requirements.
- Loans run through Fannie Mae’s Desktop Underwriter can reach 50 percent when the system finds enough compensating factors, such as strong credit or substantial reserves.7Fannie Mae. B3-6-02, Debt-to-Income Ratios
Every recurring obligation counts on the debt side: the full housing payment with taxes and insurance, car payments, credit card minimums, supplemental health insurance premiums, and any payments on other properties. Because retirement income is largely fixed, small bumps in property taxes or insurance can push your ratio higher than expected. Ask the lender to run the calculation with a realistic escrow estimate, not just principal and interest.
Adding a Non-Occupant Co-Borrower
If your income alone doesn’t get you across the line, an adult child or other family member can join the loan as a non-occupant co-borrower. Their income and debts combine with yours for a joint ratio. Under automated underwriting there’s no separate ratio requirement for you as the occupant — combined numbers govern. On manually underwritten loans, your individual ratio can’t exceed 43 percent even with a co-borrower on the application.8Fannie Mae. Non-Occupant Borrowers The co-borrower takes on full legal responsibility for the loan, which affects their own credit and borrowing capacity.
Which Mortgage Programs to Consider
Retirees can use any standard mortgage program, plus one built specifically for older buyers.
Conventional Loans
Conventional loans follow Fannie Mae or Freddie Mac guidelines and generally require a minimum credit score of 620 for fixed-rate mortgages.9Fannie Mae. B3-5.1-01, General Requirements for Credit Scores Down payments on a primary residence start at 3 to 5 percent, though putting more down lowers the monthly payment and can help a tight debt-to-income ratio.
FHA Loans
FHA loans allow down payments as low as 3.5 percent for borrowers with a credit score of 580 or higher. Scores between 500 and 579 can still qualify with 10 percent down. FHA loans carry both an upfront and an annual mortgage insurance premium, raising the effective cost over time.
VA Loans
Veterans and eligible surviving spouses may qualify for VA-backed purchase loans, which often require no down payment and no private mortgage insurance.10U.S. Department of Veterans Affairs. VA Purchase Loan A VA funding fee applies in most cases and can be financed into the loan. Retired veterans with a VA disability rating may be exempt from that fee.
HECM for Purchase
The Home Equity Conversion Mortgage for Purchase is available to borrowers 62 and older who want to buy a new primary residence without taking on a monthly mortgage payment.11Consumer Financial Protection Bureau. Can I Use a Reverse Mortgage Loan to Buy a Home? The trade-off is a large upfront cash requirement: buyers typically need to cover roughly 45 to 62 percent of the purchase price as a down payment, with the exact share depending on age and current rates. Older borrowers qualify for more loan proceeds, meaning a smaller down payment.
You owe no monthly principal or interest as long as you live in the home as your primary residence, keep the property maintained, and stay current on property taxes and homeowners insurance. Falling behind on taxes or insurance, or moving out for more than 12 consecutive months, can make the loan due in full. The balance also becomes due when the last surviving borrower dies or sells, at which point heirs must repay the balance or sell the property.
Reserve Requirements After Closing
Lenders want to see cash left after closing for unexpected costs. Under Fannie Mae, a one-unit primary residence processed through automated underwriting has no minimum reserve requirement. Second homes require at least two months of mortgage payments in reserve, and investment properties require six.12Fannie Mae. B3-4.1-01, Minimum Reserve Requirements Reserves count in months of the full housing payment — principal, interest, taxes, insurance, and any association dues.
If you’re using asset depletion, the same dollars can’t serve two purposes. The lender subtracts your down payment, closing costs, and required reserves from your assets before calculating monthly income, so decide how much to put down with that trade-off in mind.