How to qualify for a mortgage as a retiree


Many people aim to pay off their mortgage when they retire. Others sell their homes on retirement and rent instead.

But what if you’re the opposite and decide to buy a new home or switch from renting to owning after your shift is over? You may be wondering how you will qualify with a mortgage lender in the absence of a job. But in fact, getting a mortgage as a retiree isn’t that much different getting one while you’re working. Here’s how to get a home loan during retirement.

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1. Have a healthy source of income

While some retirees choose to work part time, many do not work at all. So how do you show proof of income if you are not actually working? You’ll just need to show a lender that you have money coming in every month, even if it doesn’t come in the form of a typical paycheck.

Seniors are generally entitled to Social Security benefits. In addition, you can have:

  • A pension that pays you regularly
  • Investment income from a brokerage account
  • A retirement plan, such as an IRA, from which you can make regular withdrawals

All of this counts as income for mortgage approval purposes because it shows that you are capable of paying off a loan.

2. Have great credit

Having a strong credit score is essential to getting approved for a mortgage, regardless of your age. The minimum credit score for a conventional mortgage is 620, but it’s best to aim higher. In fact, if you want to get the best mortgage rates available, you should aim for a score in the mid-700s or higher.

If your credit score might need a boost, the best thing you can do is pay all of your bills on time and also pay off some existing credit card debt. Plus, using the three major credit bureaus to check your credit report for errors – and correcting ones that are unfavorable to you – could help your score increase.

For more information, see our guide on how to create credit quickly.

3. Keep your debt to a minimum

Another factor that mortgage lenders look at when assessing loan applicants is their debt-to-income ratio. It is a measure of your outstanding debt compared to your income. It is important to keep this ratio low, because the more it increases, the more risky you become. And if you already have a lot of debt, your lender may be concerned that you might not be able to keep up with your mortgage payments on top of your existing loans. You can lower your debt ratio by paying off your existing debts or increasing your income. This may mean having to take a part-time job, even if you are doing it temporarily.

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


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