Home > Education > Home & Mortgage > Q&A: Can I Get a Mortgage When I am Retired?
Pile of coins and money on a table with a house in background

Q&A: Can I Get a Mortgage When I am Retired?

The answer depends on your specific financial situation.

Question: I’m 65 years old and about to retire. My home’s paid for. I have $3 million in savings and investments, plus about $60,000 a year coming in from annuities and interest dividends. I haven’t started taking Social Security yet, but I will soon, and that will bring in another $25,000 a year or so. I’m thinking of moving to Florida or somewhere else that’s retirement-friendly. Will I have trouble getting a mortgage?

Ric: Probably not, although it depends on the size of the mortgage.

Remember that a mortgage is not a loan against a house; rather, it’s a loan against your income. Therefore, the lender will want to know you have enough income to repay the loan.

Your $85,000 income should be adequate for you to obtain a $350,000 mortgage. Assuming it’s 80% of the home’s value, you could buy a $437,000 home.

But this ignores the $3 million you have. You could generate an income stream from that, which could easily produce an additional $120,000 or more per year. That would enable you to qualify for a $500,000 mortgage and a $625,000 home. These numbers assume a 4.5% interest rate and, of course, are based on a high credit score (720 or above) and the debt-to-income ratio that lenders in your state and city typically follow.

You’re going through one of life’s major changes; you’re talking about relocating to another state — you don’t even know which one yet. Also, you’re talking about becoming entirely dependent on investment income for your lifestyle, buying a home and dealing with a mortgage question related to that. You’ve got a lot going on. The only way to make this more challenging is to add, “I’m getting married too.”

With all these stressful things occurring, you’re a wonderful candidate for meeting with a financial advisor to help you sort through it all and make sure you’re handling things correctly, through a comprehensive and holistic approach instead of acting within a silo.

We call this compartmentalizing — focusing on just one area, possibly making a good decision there but then creating a problem in another area. For example, you might make the right mortgage decision — only to discover you hate the town you just moved to.

This is why you should talk first with an objective financial advisor, not a real estate agent or mortgage broker. After all, the agent gets paid only if you buy a house — the more expensive the better, for him — and the broker’s compensation is based on the size and type of mortgage you get. These people are thus not in a position to give you advice that’s in your best interest; they suffer from too many conflicts.

Visit the fee-based financial advisor first, who can evaluate your entire situation and help you make these important decisions. Then you’ll be ready to hire the Realtor and mortgage broker — with confidence.

Talk with a Financial Advisor

No Cost. No Obligation.

Single Step Form Articles

By clicking submit you are agreeing to our Terms of Use and Privacy Policy.

Schedule Your Free, No Obligation Consultation

You May Also Like:

  • Man and woman relax by a creek after learning how to manage their money
    Article
    10 Important Lessons About Personal Finance
    Read More
  • Passport and plane tickets on top of a travel insurance form
    Article
    Should You Buy Travel Insurance?
    Read More
  • Professional woman shakes hands with man as she leaves her job
    Article
    Changing Jobs? Be Aware of These 401(k) Rollover Pitfalls!
    Read More