Relocating while retired poses all sorts of daunting financial questions—questions that often loom so threateningly that many retirees just avoid moving altogether. Without a regular paycheck coming in, can I get a mortgage? How will I pay a mortgage without a job?
It is possible to get a mortgage while retired. It might be more difficult to borrow money after your career has wound down, but it’s not impossible. Getting a mortgage will depend on four factors:
Income calculation (drawdown from retirement method)
Any mortgage application will calculate your available income. The drawdown from retirement method is one way retirees can determine their “income.” As long as you’re older than 59 ½ years old, you can use withdraws from a retirement account (for at least the last two months) as a means of determining income.
Income calculation (asset depletion method)
Asset depletion is another method for determining a retired person’s income. This method calculates the person’s financial assets, then subtracts the down payment and closing costs. Then this method takes 70% of that new figure and divides by 360 to determine a monthly number.
Debt-to-income ratio
No more than 43% of a retiree’s income can go toward servicing a debt. This includes any debt that you’ve co-signed for. This last part often comes up when a parent has co-signed on a mortgage for their adult child.
Housing expense ratio
Payments for a mortgage, mortgage interest, taxes, and insurance must be 36% or less of a retiree’s available income.
Credit score
A retired person looking for a mortgage should have a credit score of at least 780. Even if all the above factors are satisfied, low credit can derail the whole thing.
In the 29 years the Real Estate Gals have been helping people find homes they love, we’ve built relationships with some of Seattle’s most helpful, trustworthy mortgage lenders. These four (Lisa Pim, Angela Guyot, Liz Fudacz, and Kate Beck) consistently go above and beyond for their clients. Time is of the essence when buying a home, and you want a knowledgeable and responsive lender in your corner. Lenders aren’t one-size-fits-all, so check with us about who might be the best match for your specific situation
Getting a mortgage while retired isn’t easy. Neither is relocating while retired. Many people just don’t have the energy anymore—especially if they have decades of possessions they’ve accumulated in their current home. Fortunately, we pride ourselves on making tough living transitions as easy as possible.
We help our clients with the difficult, “non-essential” complications of transitioning into a new living situation. If your move comes with a difficult search for a mortgage, a heavy emotional burden, or difficult moving logistics, you don’t have to carry those alone. We’ve helped dozens of clients find new homes in their retirement, many of whom didn’t think moving was possible for them. We make this process stress-free and rewarding.
