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Mortgages for Seniors: An Overview of Loan Options

It’s becoming more common for seniors to have a mortgage in retirement. With today’s low rates, a new home loan can help older adults enjoy their golden years to the fullest. 

Let’s take a closer look at loan options and whether a mortgage later in life makes sense for you or a loved one.

Can seniors qualify for a mortgage?

The mortgage approval process takes time. Lenders want to be sure that you’re a good candidate for a loan, meaning you’ve been financially responsible in the past. It’s why they review your credit score and history, debt-to-income (DTI) ratio, and assets.

Many seniors assume they can’t qualify for a mortgage because they no longer have a job. However, lenders accept Social Security and other nontaxable income to help these borrowers qualify for a loan. You should also know that the Equal Credit Opportunity Act makes it unlawful for lenders to discriminate against an applicant because of age.

Not all seniors meet the requirements for a mortgage. For example, if you’re struggling with high-interest debt, a lender may not be comfortable moving forward with a loan program. Little or no down payment also reduces your approval chances.

Reasons to get a home loan in retirement

Monthly savings

Think about what you could do with more disposable income in retirement. Maybe put it toward a new hobby, vacations, or even spoiling your grandchildren? Whatever your ideas, you might be able to save hundreds of dollars a month with a low-rate mortgage.

Financial flexibility

Say you have little savings but own your home outright. With home prices still increasing across Colorado, you probably have significant equity in your residence. A mortgage refinance allows borrowers to supplement their retirement income or consolidate debt. 

Access cash

How would you pay for an unexpected expense? Relying on credit cards in retirement often snowballs into financial disaster. When the time comes to contact a lender, be sure to ask about getting cash from your home and then establishing an emergency fund.

Home repairs or improvements

Perhaps you already have an emergency fund, but you don’t have the necessary cash for home improvements. Obtaining a mortgage could provide the opportunity to finally remodel the kitchen or make your living space more accessible. Again, discuss your goals with your lender and explore possible loan programs.


Perhaps your home is getting to be too much for you and your family. You could think about selling and buying a smaller, more comfortable home that requires a fraction of the maintenance. Why not add the profit from the sale to your savings and then get a mortgage for your new home?

Are there mortgages for retirees?

Check out these popular home loan options for seniors.

Conventional loan

A conventional mortgage is the safest bet for most homeowners. While you might opt for a 30-year loan right away, you could select a 15-year term if you have the funds. Talk with your family and lender before making a decision.

Cash-out refinance

As we mentioned above, there’s a lot to like about a cash-out refinance. Just remember the risk involved with taking on a higher loan amount. The last thing anybody wants is for you to lose your home because you didn’t understand the details of your new mortgage.

Reverse mortgage 

A reverse mortgage provides numerous benefits for homeowners 62 and older. This particular loan enables you to stop making mortgage payments and access tax-free cash while staying in the home you love. Consider all three types of reverse mortgages as you do your research.

Increase your approval chances

Now that you have a better understanding of home loans for seniors, let’s revisit the approval process. Do yourself a favor and put together all relevant information before reaching out to a lender. Expect to submit documentation related to your Social Security, pension, other retirement accounts, annuities, and any other sources of income.

Keep in mind that the approval process goes quicker if you’re responsive to your lender and their team. Do your best to get back to any forms of communication the same day, and don’t hesitate to ask questions along the way. 

Is it worth it?

Not everyone benefits from a mortgage in their retirement years. It’s important to work with a lender who has your best interest in mind and won’t pressure you into a loan you won’t need. 

Our friends at American Financing would be happy to walk you through custom loan options and discuss pre-approval in greater detail. And if you’re interested in selling your home, American Home Agents has you covered!

Let us be your one-stop-shop for all of your homeownership needs.

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