Can You Get a Mortgage In Retirement? And Should You?
With interest rates still stubbornly high and home prices elevated, here’s how a retiree living on a fixed income can land a decent mortgage.


Retirees settling into their golden years may be considering the idea of a new home. Most often, a new home means taking on a new mortgage in retirement. Why buy a new home after retiring? Reasons include downsizing, moving to a more agreeable climate, or being closer to the grandkids.
Yet just like any other homebuyer, retirees face formidable issues like high mortgage rates, elevated home prices, and associated costs on insurance, maintenance, and possibly homeowner association fees.
The average U.S. mortgage rate stands at 6.93% in January, while median home prices are expected to rise to $410,700 in 2025, according to the National Association of Realtors (NAR). A separate NAR report showed that over one-third of U.S. homebuyers last year were pre-retirement or retirement age, spanning 59 to 99, and the majority of them used some form of financing.

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The high cost of buying a home is particularly problematic for U.S. retirees living on a fixed income but hoping to secure a good mortgage loan to get the job done.
“Many of the homebuying issues retirees face are similar to younger (people), like higher interest rates, which can limit the size of the mortgage or the size of the home being purchased,” said Melissa Shaw, Wealth Management Advisor at TIAA in Palo Alto, Cal.
However, retirees face a few additional issues when trying to qualify for a mortgage.
“Many retirees are on fixed incomes, often without the ability to earn additional income,” Shaw noted.
That means older buyers need to be fully aware of what they can and can’t afford and the associated expenses of owning a home, such as maintenance, repairs, and insurance.
“You’d hate to purchase a home and not be able to afford basic necessities or the things that make retirement enjoyable, like travel, spending time with family and personal hobbies,” Shaw added.
High interest rates projected for the rest of the year can also stall a retiree’s mortgage experience.
“High rates alone pose a problem for retirees hoping to buy,” said Adam Hamilton, CEO at REI Hub in Richmond, Va. He noted that many retirees weren't planning for the current state of the economy and might find the cost of buying to be too high relative to their budgets.
"If they still really want to buy, being flexible with location might help," Hamilton said, "and making sure to shop around for the best lender is crucial.”
Is it hard to get a mortgage in retirement?
The good news is that with due diligence and a carefully crafted financial plan, retirees can get the mortgage they need for a new home in 2025.
Can you use retirement income to qualify for a mortgage?
Like with any home purchase, more income and less debt are ideal. Yet that goal can be a unique issue for older homebuyers.
"For retirees, one of the biggest issues they face is income verification, especially if they rely on a fixed income like Social Security or a pension,” said Christy Bunce, President at New American Funding in Irvine, Cal.
“However, if they have significant assets, that could help them qualify for a home loan," she said. "Their debt-to-income ratio is also important as it shows how much they’d have left over to pay their mortgage."
In addition to any income from work, income sources lenders focus on include: Social Security benefits, spousal benefits, disability payments, pension or annuity payments, interest and dividend payments on investments, a 401(k) or IRA.
What steps should you take before applying for a mortgage in retirement?
Given that their best earning years are likely behind them, retirees should ensure their finances are in order before applying for a mortgage. Telling the right financial story goes a long way in getting a mortgage for older homebuyers.
“This includes getting a copy of your credit report to make sure it's accurate and to maximize that credit score, as it impacts interest rates,” said Matthew Locke, National Mortgage Sales Manager at UMB Bank.
“We also recommend paying down revolving debts and fully understanding what payment they can comfortably afford," Locke said. "Additionally, speak to a trusted mortgage professional to fully understand the cost to close a home deal and the monthly payment obligation going forward.”
Just like other homebuyers, retirees need to consider whether the home they are buying is to be used as their primary residence or a vacation home, and therefore how that impacts their mortgage rate, taxes and any expenses for the home.
Retirees should be treated precisely the same as any other consumer looking for a mortgage: “Just like anyone else, credit history, FICO Scores, income sources and the ability to repay the loan matter most.”
TIAA's Shaw advises crossing these items off your mortgage to-do list before applying.
- Ensure you have enough income to pay for the mortgage, associated home expenses, and any emergency or incidental issues not covered by insurance.
- Research the homeowner’s insurance options in your potential location and evaluate the likelihood of those costs increasing.
- Gather two years of income, bank, and investment/retirement account statements (your lender may require documents for a more extended period). “Make sure to review your most recent credit report, too,” Shaw advised.
- Use online mortgage tools to estimate the costs associated with the home purchase so that you know exactly what you can afford.
- Discuss the options for generating additional income from your investment or retirement accounts with your financial advisor. “Many of my clients set up monthly systematic withdrawals from their retirement accounts to meet the income requirements for a mortgage,” Shaw said.
- Consider using professionals like a mortgage broker and financial advisor to help you navigate the landscape.
Avoid these mistakes when applying for a mortgage in retirement
The biggest mistake Shaw sees from retired clients is taking on a larger mortgage than they can afford or not factoring in additional housing-related expenses.
“For example, I had a client who retired and moved from a coastal area to a more inland area in California,” she said. “Although it’s only a few hours away, the difference in the weather is significant. The client didn’t anticipate that he and his family would need to use their air conditioning or pool as often, leading to a sizeable increase in energy and cleaning costs.”
Those often-unexpected additional expenses lead to increased withdrawals from the client’s retirement account.
“My client didn’t have any other income source or the ability to return to the workforce,” Shaw noted. “This meant tightening the budget on some of the other non-essential expenses. Retirees should always ensure a buffer in their budget for unexpected increases in the cost of basics, like utilities, insurance, and home maintenance.”
Bottom line
Retirees will increase their odds of getting a good mortgage by presenting lenders with a clear picture showing they’re solid loan candidates.
“Your best move is to show lenders you have stable finances by using assets to bolster income,” said Matt Schwartz, co-founder at VA Loan Network in Dallas, Texas. Also, focus on your credit scores or don’t make any significant financial withdrawals before applying.”
Additionally, retirees should be patient about finding the right house in the neighborhood that meets their financial guidelines.
“Don’t be impatient about moving too quickly,” Locke advises. “Also, avoid buying too much house and using too many assets to purchase the house."
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A former Wall Street bond trader, Brian O’Connell is the author of two books: “The 401k Millionaire” and “CNBC’s Creating Wealth.” He's written for national finance publications such as TheStreet.com, CBS News, The Wall Street Journal, U.S. News & World Report, Forbes, Fox News and others. With 20 years of experience covering business news and trends, he believes education is the best gift a financial consumer can receive – and brings that philosophy to his work. Brian is a graduate of the University of Massachusetts, and currently resides in Palmas del Mar, Puerto Rico during the winter, and in Bucks County, Pa., when Mother Nature cooperates.
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