Yes, a retired person can get a home loan. Lenders look at your ability to repay the debt, and retirement income counts the same way wages do once you can document it. Social Security, pensions, annuity payments, investment income, and even the balances in your retirement accounts can all be used to qualify. The paperwork looks different from what you handed over during your working years, but the door is open.
Age Alone Cannot Disqualify You
The Equal Credit Opportunity Act prohibits creditors from discriminating based on age in any part of a credit transaction, provided you have the legal capacity to sign a contract.1Office of the Law Revision Counsel. 15 USC 1691 – Scope of Prohibition A lender can ask your age and ask whether your income comes from Social Security or a pension, but only to evaluate how much you receive and how long it will last. Credit scoring systems are specifically barred from assigning a negative value to an elderly applicant’s age.
If you believe a lender turned you down because of your age rather than your finances, you can file a complaint with the Consumer Financial Protection Bureau. This protection matters most when a lender questions the “stability” of retirement income without a legitimate financial basis for doing so.
Retirement Income That Lenders Will Count
The common thread across every acceptable income source is documentation and durability. You need to show the income exists, that it is consistent, and that it will continue.
Social Security, Pensions, and Annuities
These are the most straightforward sources. The lender counts the full gross amount shown on your benefit or distribution statement. For income with a defined end date, the payments must be scheduled to continue for at least three years from the date on your mortgage note.2Fannie Mae. B3-3.4-03, Annuity, Pension, or Retirement Income Social Security and most pensions are treated as permanent and clear this hurdle automatically.
Dividends and Interest
If your portfolio produces dividend or interest income, you need two years of history, documented through federal tax returns or 24 months of account statements.3Fannie Mae. Interest and Dividend Income When the trend is stable or rising, the lender averages the most recent two years. When it is declining, only the most recent year is used. The lender also subtracts any assets you plan to use for the down payment or closing costs before projecting future dividend income, so the same money cannot be counted twice.
The Nontaxable Income Gross-Up
This is one of the biggest advantages retirees have. When part of your income is nontaxable, Fannie Mae lets the lender add 25% to the nontaxable portion for qualification purposes.4Fannie Mae. General Income Information If your Social Security benefit is $2,000 a month and none of it is taxed, your qualifying income becomes $2,500. Nontaxable dollars stretch further than taxable ones, so the gross-up puts your income on an even footing with a working applicant’s salary. This can meaningfully change how much house you qualify for.
Turning Retirement Savings Into Qualifying Income
Retirees with large retirement accounts but modest monthly benefits have another path. Fannie Mae allows lenders to convert eligible account balances into a monthly income figure through what is often called asset depletion or employment-related asset income.
The calculation starts with the current value of your eligible accounts, which can include 401(k)s, IRAs, and brokerage accounts. The lender subtracts the money needed for your down payment, closing costs, and required reserves. If an early-distribution penalty would apply, that penalty amount comes off the top as well.5Fannie Mae. Employment Related Assets as Qualifying Income For most retirees past age 59½, no penalty applies, so more of the balance counts.
The remaining balance is divided by the number of months in the loan term. For a 30-year mortgage, that divisor is 360. If you have $700,000 in an IRA, use $80,000 for closing costs and reserves, and owe no early-distribution penalty, the lender divides the remaining $620,000 by 360 and credits you with $1,722 per month in qualifying income. Added to Social Security, that can push a retiree well past the threshold for a conventional loan.
Individual lenders sometimes apply their own conservative overlays, like discounting account balances to account for market volatility or future taxes. If one lender’s math seems unusually harsh, it is worth getting a second quote.
Credit Score and Debt-to-Income Minimums
Retirement does not shift the credit score floors. Conventional loans backed by Fannie Mae require a minimum score of 620 for most transactions.6Fannie Mae. Eligibility Matrix FHA-backed loans go lower: 580 with a 3.5% down payment, or between 500 and 579 if you put down at least 10%.
Debt-to-income matters just as much. The lender adds all your monthly obligations, including car payments, credit cards, and the proposed mortgage payment with taxes and insurance, then compares that total to your gross monthly income. Under Fannie Mae’s automated underwriting, the maximum ratio is 50%.7Fannie Mae. Desktop Underwriter Version 10.1 – Debt-to-Income Ratio Updates Manual underwriting caps it tighter at 45%. Paying off a car loan or clearing credit card balances before you apply gives you real room on this ratio.
Loan Programs Worth Considering
Conventional Loans
A conventional loan backed by Fannie Mae or Freddie Mac is the most common option for retirees with solid credit and assets. Down payments start as low as 3% for certain programs, and putting down 20% eliminates private mortgage insurance. Conventional loans fit well when your combined retirement income and asset-depletion calculation comfortably cover the monthly payment.
FHA Loans
FHA loans are designed for borrowers who need flexibility on credit or down payment. The 3.5% minimum down with a 580 credit score makes them accessible to retirees with steady benefit income but limited savings. FHA loans carry an upfront mortgage insurance premium and ongoing monthly mortgage insurance, which raises the lifetime cost. For 2026, FHA loan limits range from $541,287 in lower-cost areas to $1,249,125 in high-cost markets.8U.S. Department of Housing and Urban Development. HUD FHA Announces 2026 Loan Limits
VA Loans for Retired Veterans
Retired veterans who meet the active-duty service requirements can use VA-backed home loans. These require no down payment and carry no monthly mortgage insurance.9Veterans Affairs. Eligibility for VA Home Loan Programs A one-time funding fee of 0.5% to 3.3% of the loan amount applies, but veterans receiving compensation for a service-connected disability are exempt.10Veterans Affairs. Home Loan Borrowers Can Now Deduct Funding Fees For eligible retirees, the VA loan is often the cheapest way to buy a home. You can request a Certificate of Eligibility through the VA’s online portal or let your lender pull it for you.
Reverse Mortgages at 62 and Older
A Home Equity Conversion Mortgage, the federally insured reverse mortgage, works in the opposite direction from a regular loan. The lender pays you from your home equity, and no monthly payments are due. You must be at least 62 and the property must be your primary residence.11Office of the Law Revision Counsel. 12 USC 1715z-20 – Insurance of Home Equity Conversion Mortgages The maximum claim amount for 2026 is $1,249,125.8U.S. Department of Housing and Urban Development. HUD FHA Announces 2026 Loan Limits
The loan balance grows as interest accrues, and repayment comes due when you sell, move out permanently, or die. You remain responsible for property taxes, homeowner’s insurance, and maintenance. A HECM is non-recourse, which means neither you nor your heirs owe anything beyond the home’s value if the balance eventually exceeds it.11Office of the Law Revision Counsel. 12 USC 1715z-20 – Insurance of Home Equity Conversion Mortgages Federal law also requires you to complete counseling with a HUD-approved counselor before closing, covering alternatives, financial implications, tax consequences, and the effect on your estate.12U.S. Department of Housing and Urban Development. Certificate of HECM Counseling The counseling certificate is good for 180 days. A HECM makes the most sense for retirees who are asset-rich and income-poor, because it unlocks equity without requiring you to qualify on monthly income.
Watch Out for Medicare and Tax Surprises
Pulling a large lump sum from a traditional IRA or 401(k) to fund a down payment is taxable as ordinary income in the year you take it. That one-time spike can push you into a higher federal tax bracket and trigger consequences many retirees do not anticipate.
The most expensive surprise is often Medicare. Part B premiums are based on your modified adjusted gross income from two years earlier. For 2026, an individual filer earning up to $109,000 pays the standard premium of $202.90 per month. Income between $109,000 and $137,000 raises the premium to $284.10 per month, and the tiers keep climbing, reaching $689.90 per month at income of $500,000 or more.13Centers for Medicare & Medicaid Services. 2026 Medicare Parts A and B Premiums and Deductibles A $200,000 IRA withdrawal stacked on top of Social Security and pension income can easily push a retiree into the surcharge zone for two calendar years: the year of the withdrawal and the year the premiums adjust.
When timing allows, spread large withdrawals across two or three tax years, pulling funds into a savings account before you start house-hunting. Roth IRA distributions are not counted as taxable income and do not trigger Medicare surcharges, so a Roth account is the ideal source for a down payment if you have one.
Adding a Co-Borrower
If your own income and assets fall short, a family member can help you qualify. FHA loans are especially flexible: a non-occupant co-borrower who will not live in the home can add their income to your application. Eligible relatives include children, parents, grandparents, siblings, and spouses or domestic partners.14U.S. Department of Housing and Urban Development. Guidelines for Co-Borrowers and Co-Signers The co-borrower takes title at closing and is fully liable for the debt, so the arrangement requires real trust on both sides. A co-signer, by contrast, signs the note but does not go on the title.
Documents to Have Ready
Expect more paperwork than a W-2 borrower provides. Every income stream needs independent verification. Before you apply, gather:
- Your most recent Social Security award letter and the SSA-1099 forms from the past two years.
- 1099-R forms for the past two years and the most recent distribution statements for any pension or annuity.
- Two years of federal tax returns and current account statements showing dividend and interest payments.
- The most recent statements for every retirement and brokerage account you want the lender to count toward asset depletion. Most lenders want two to three consecutive months.
- Signed federal tax returns, or IRS transcripts, for the most recent two years, even if your income is mostly nontaxable.
With those documents assembled and your debts kept in check, retirement itself is no obstacle to a mortgage approval. The qualification math simply uses different inputs, and in the case of the nontaxable gross-up and asset depletion, inputs that often favor you.