A question asked frequently is, “Can I obtain a mortgage even if I am retired?” Fortunately, the answer to this question is undoubtedly, yes! And no we are not talking just talking about reverse mortgages.
In fact, qualifying a retiree for a mortgage can actually be easier than expected.
The first way you can qualify for a mortgage in retirement is to utilize the fixed income that you are receiving. Some common forms of fixed income during retirement include social security, a pension, annuities, or a combination of all three. In order to document these forms of income, an award letter outlining the fixed income instrument along with evidence of receipt in your bank account.
If you are recently retired or receiving little or no fixed income in retirement, another easy way to qualify for a mortgage is to set up a monthly recurring distribution from your retirement account. This distribution will act like fixed income from a loan-qualifying point of view. As a general rule of thumb, you must be able to provide at least 3 years of continuance across all your retirement assets.
For example, if you have $360,000 across all your retirement accounts you could set up a distribution of $10,000 to qualify. The documentation required to do this is a distribution letter which your brokerage will be able to provide along with evidence of receipt prior to closing. The distribution can be reduced or turned off after the loan closes, which will prevent you from taking unnecessary draws in the future.
If you are still unable to qualify using fixed income or your retirement assets there are still a few other ways to qualify for a mortgage using non-traditional methods. If you happen to have a large sum of funds tied up in taxable accounts, you might be able to qualify for an asset-only or asset depletion-type loan. Alternatively, if you have a modest amount of assets but a great credit history you could qualify for a community mortgage program. If neither of these options work you could also look into doing a reverse mortgage.