Retiring does not end your ability to get a mortgage. Retirees buy, downsize, relocate and refinance every day, and federal law bars lenders from turning you down because of your age. What changes is how you prove you can repay. Instead of pay stubs, lenders look at Social Security, pensions, retirement account withdrawals and sometimes the assets themselves. This guide explains each method and the planning questions to answer before you borrow in retirement.
Quick answer
Yes, you can get a mortgage in retirement. Lenders count Social Security, pension and annuity income, and retirement account distributions that are documented to continue for at least three years. If your income is modest but your savings are large, Fannie Mae and Freddie Mac also allow some borrowers to qualify by converting eligible assets into a monthly income figure. Borrowers 62 and older can also buy with a HECM for Purchase, a reverse mortgage that requires no monthly mortgage payment. Choose the method that keeps your retirement income plan and tax bill intact, not just the one that qualifies.
Can a lender deny you a mortgage because of your age?
No. The Equal Credit Opportunity Act and its Regulation B list age as a prohibited basis for credit decisions, as long as you are old enough to sign a binding contract. A lender cannot refuse a 30 year loan because of your life expectancy or treat a 78 year old applicant differently from a 48 year old one with the same income, credit and assets. Lenders can still verify that your income is likely to continue, which is where documentation matters.
How do lenders count retirement income?
Each income source has its own documentation rules. The table summarizes Fannie Mae’s current guidelines, which most conventional lenders follow.
| Income source | How it is documented | Continuance rule |
|---|---|---|
| Social Security on your own record | Award letter, benefit statement or bank statement showing deposits | No continuance check needed |
| Social Security on someone else’s record | Award letter showing the benefit amount | Must continue at least 3 years |
| Pension or government annuity | Benefit statement, award letter, 1099 or bank statement | Must continue at least 3 years, often shown by the plan’s terms |
| IRA, 401(k) or other retirement distributions | Account statements showing regular withdrawals | Balance must support at least 3 years of distributions |
| Private annuity | Contract or statement showing payment terms | Must continue at least 3 years |
Retirement account withdrawals
If you take regular distributions from an IRA or 401(k), lenders can count them when the account balance will support at least three more years of withdrawals and you have unrestricted access without penalty. If your distributions vary, lenders average them over the past 12 months. Several retirement accounts can be combined to show the three years.
Grossing up nontaxable income
Income you do not pay tax on can be increased for qualifying, usually by 25%, because it goes further than taxable income. Social Security has a special rule: without extra documentation, lenders can treat 15% of your benefit as nontaxable and gross up only that portion. On a $3,000 monthly benefit, that adds about $113, for $3,113 of qualifying income. Showing that more of your benefit is untaxed, for example with your tax return, can increase that figure.
Can you qualify for a mortgage using your savings instead of income?
Yes. Both Fannie Mae and Freddie Mac let lenders turn eligible assets into a monthly income figure, which helps retirees who have significant savings but draw little from them. The formulas differ, so the same savings can qualify you for different amounts.
| Program | Eligible assets | How monthly income is calculated | Main limits |
|---|---|---|---|
| Fannie Mae employment related assets | Retirement accounts you can access without restriction, plus severance and lump sum retirement payouts | Balance, minus any withdrawal penalty and the funds needed for closing and reserves, divided by the loan term in months (360 for a 30 year loan) | Purchase or limited cash out refinance of a principal residence or second home; up to 70% loan to value, or 80% if the asset owner is 62 or older; used when you are not already drawing enough from the account to qualify |
| Freddie Mac assets as income | Fully vested retirement accounts withdrawable without penalty, and bank or investment accounts when an owner is 62 or older | Net eligible assets, after funds needed to close, divided by 240 | Purchase or no cash out refinance of a one or two unit principal residence or second home; up to 80% loan to value |
Freddie Mac has announced an update to its rule, which lenders may use now and must use for loans closing on or after February 3, 2027. It divides by 180 instead of 240, also subtracts required reserves, requires at least $30,000 in net eligible assets and adds seasoning rules for bank and investment accounts.
An example
Suppose you are 66, have $1,000,000 in IRAs you can withdraw without penalty, and want to buy a $750,000 home with 25% down. Assume $15,000 in closing costs and $30,000 in required reserves.
- Fannie Mae: $1,000,000 minus $187,500 down, $15,000 closing costs and $30,000 reserves leaves $767,500. Divided by 360, that is about $2,132 a month of qualifying income.
- Freddie Mac, current rule: $1,000,000 minus $202,500 needed to close leaves $797,500. Divided by 240, that is about $3,323 a month.
- Freddie Mac, updated rule: $767,500 after closing funds and reserves, divided by 180, is about $4,264 a month.
This asset income is added to Social Security, pensions and any other income you have. You do not have to actually withdraw the money on that schedule. It is a qualifying calculation, not a required distribution plan.
Retired or retiring soon?
David can review which income and asset method qualifies you best and how each fits your withdrawal plan.
What is a HECM for Purchase?
A Home Equity Conversion Mortgage for Purchase is an FHA insured reverse mortgage used to buy a new principal residence. The youngest borrower must be at least 62. You make a larger down payment, typically from savings or the sale of your previous home, and the reverse mortgage covers the rest. No monthly mortgage payment is required, although you must keep paying property taxes, homeowners insurance and upkeep and live in the home as your principal residence.
- The 2026 maximum claim amount is $1,249,125, which caps the home value used to calculate the loan.
- The amount you can borrow depends on the age of the youngest borrower, current rates and the home’s value, so older borrowers can generally borrow more.
- HUD approved counseling is required before you apply.
- The loan balance grows over time and is repaid when the last borrower sells, moves out permanently or passes away.
A HECM for Purchase can free up monthly cash flow for retirees who want to right size without paying all cash. It also reduces the equity left to heirs, so it deserves a family conversation.
Should you pay cash or take a mortgage in retirement?
Paying cash removes a monthly bill, but it is not automatically the conservative choice. A financial planner would weigh these points:
- Taxes on withdrawals. Pulling a large sum from a traditional IRA or 401(k) to buy a home is taxable income in the year you withdraw it. A large withdrawal can push you into a higher bracket and raise the income based Medicare premiums you pay two years later.
- Liquidity. Money in a house is hard to reach. Keeping savings liquid protects you against health costs and market downturns.
- Sequence of returns. Selling investments after a market drop to fund a purchase locks in losses at the worst time.
- Cost of borrowing. With average 30 year rates near 7% in late September 2026, the mortgage has to be weighed against what your savings realistically earn after taxes.
- Estate goals. A paid off home passes to heirs more simply. A mortgage or reverse mortgage reduces what is left in the home.
Many retirees land on a middle path: a larger down payment to keep the payment modest, with enough liquidity left to cover several years of spending. If you are weighing whether to pay off an existing loan, see our guide on paying off your mortgage early or investing.
How should you prepare to get a mortgage in retirement?
- Gather income proof. Collect your Social Security award letter, pension statements and the latest two months of retirement account statements.
- Know your net worth by account type. Separate taxable accounts, traditional retirement accounts and Roth accounts. Each is treated differently for qualifying and for taxes.
- Plan the down payment source. Decide whether it comes from a home sale, taxable savings or retirement withdrawals, and estimate the tax on any withdrawal before you commit.
- Keep reserves in place. Lenders want to see assets left after closing, and so should you.
- Compare methods side by side. Ask your loan officer to qualify you with income only, with assets as income and, if you are 62 or older, with a HECM for Purchase.
Frequently asked questions
Can you get a 30 year mortgage at 70 or older?
Yes. Age cannot be used against you in a credit decision under the Equal Credit Opportunity Act. If your income, assets and credit qualify, you can choose a 30 year term at any adult age.
Do lenders count Social Security income for a mortgage?
Yes. Social Security on your own record is counted without a continuance check. Lenders can also gross up the nontaxable portion, which by default is 15% of the benefit, by 25% when calculating your qualifying income.
Can I use my 401(k) or IRA balance to qualify for a mortgage?
Often, yes. Fannie Mae and Freddie Mac both allow eligible retirement assets to be converted into monthly qualifying income. Fannie Mae divides the net balance by the loan term in months, and Freddie Mac currently divides net eligible assets by 240.
How many years must retirement income continue to qualify?
Pension, annuity and retirement account distributions generally must be expected to continue for at least three years from the closing date. Social Security on your own record does not need a continuance check.
Is a reverse mortgage a good way to buy a home in retirement?
It can be for borrowers 62 and older who want to buy without a monthly mortgage payment and keep more savings invested. The trade off is a growing loan balance and less equity for heirs, and you must still pay taxes, insurance and upkeep.
David Arvidson, MBA, CFP®
Founding partner of ARBOR Financial Group, helping clients finance homes since 1996. MBA, University of Notre Dame. CFP® professional since 2013.
NMLS #298701
DRE #01236224
Licensed in 21 states and DC
Buying or refinancing in retirement?
Borrow in a way that protects your retirement plan.
David Arvidson, MBA, CFP®, can show how lenders will view your income and assets and compare options that keep your savings, taxes and cash flow on track.
Sources and official resources
- Fannie Mae Selling Guide: Annuity, pension or retirement income
- Fannie Mae Selling Guide: Employment related assets as qualifying income
- Fannie Mae Selling Guide: Social Security income
- Fannie Mae Selling Guide: General income information (gross up)
- Freddie Mac Guide: Section 5307.1, assets as a basis for repayment
- Freddie Mac Guide Bulletin 2026-10
- CFPB: Regulation B section 1002.6 (age)
- HUD: Home Equity Conversion Mortgages
- HUD Mortgagee Letter 2025-22: 2026 HECM limit
Information checked September 27, 2026. Rates, loan limits, tax rules and program guidelines change, so confirm current terms before you rely on them.
This article is for general education only and is not a loan offer, commitment to lend, or individualized investment, tax or legal advice. Rates, terms, fees and programs vary by lender and are subject to change without notice. All loans are subject to credit approval, underwriting guidelines and property eligibility. Examples are illustrations, not quotes or predictions. David Arvidson, NMLS #298701, DRE #01236224. ARBOR Financial Group is a DBA of The Turnkey Foundation Inc., NMLS #236669 (NMLS Consumer Access). Equal Housing Opportunity. CFP® and CERTIFIED FINANCIAL PLANNER® are certification marks owned by Certified Financial Planner Board of Standards, Inc.
