Retirement · 9 min read
Mortgages for Retirees: Five Ways to Qualify Without a Paycheck
Retirees qualify for mortgages all the time. Lenders can’t turn you down because of your age; the question is only how your income is documented. Social Security, pensions and annuities count as income. Retirement accounts can be turned into income through regular distributions or asset depletion. And if you’d rather not show income at all, there are no-ratio and reverse mortgage options. Here are the five main paths and who each fits.
First, the rule on age
The federal Equal Credit Opportunity Act prohibits lenders from discriminating based on age, as long as you’re old enough to sign a contract. A lender can’t refuse a 30-year loan because you’re 75. What it can do, like with anyone, is verify that your income or assets support the payment.
1. Use your retirement income
Social Security, pensions, annuity payments and military retirement are all standard qualifying income. You’ll typically provide award letters or benefit statements and proof of receipt, such as bank statements.
Two details work in your favor. Income that isn’t taxed, which often includes part of your Social Security, can usually be “grossed up” to reflect what it would be worth before tax. And because these payments are expected to continue, lenders generally don’t need a long history of receiving them.
2. Take regular distributions from retirement accounts
If you draw from a 401(k) or IRA, those distributions can count as income. Lenders generally want to see that the distributions are set up and that the account balance can keep paying them for at least three years. If you haven’t started distributions, setting them up before you apply is often the simplest move.
3. Qualify on your assets (asset depletion)
If you have savings but little monthly income, asset depletion turns the balance into a calculated income. Fannie Mae and Freddie Mac both have versions, and non-QM lenders offer more generous ones.
- Fannie Mae divides eligible retirement assets by the loan term, usually 360 months. Max LTV is 80% if the asset owner is 62 or older.
- Freddie Mac divides net eligible assets by 240 months today, moving to 180 months under its August 2026 bulletin.
- Non-QM asset depletion commonly divides by 60 to 84 months, which produces far more income from the same balance.
Our guide to Fannie Mae and Freddie Mac asset depletion guidelines walks through the math, and you can try your own numbers in the asset depletion calculator.
4. Skip income entirely with a no-ratio loan
Some retirees don’t want to document income at all. Our no-ratio program qualifies a primary residence on credit, equity and reserves, with no income or employment stated on the application. It starts at a 640 credit score with 6 to 9 months of reserves, and better credit allows a smaller down payment.
5. Use a reverse mortgage (62+)
A reverse mortgage (HECM) lets homeowners 62 and older borrow against their equity with no required monthly mortgage payment. You still pay property taxes, insurance and upkeep. A HECM for Purchase can even buy a new home, usually with a large down payment, often 50 to 60% of the price from savings or sale proceeds.
It’s a strong fit for someone who wants to stop making mortgage payments. It’s a weaker fit if leaving the full value of the home to heirs is the priority, because the balance grows over time.
Which path fits you?
| Your situation | Usually the best first look |
|---|---|
| Steady Social Security and pension | Conventional or FHA loan on retirement income |
| Large IRA or 401(k), small monthly income | Distributions or asset depletion |
| Brokerage and savings, need a jumbo loan | Non-QM asset depletion |
| Don’t want to document income | No-ratio loan |
| 62+ and want no monthly payment | Reverse mortgage (HECM) |
Many retirees can combine two of these, for example pension income plus asset depletion. As an independent mortgage broker, Save Financial can lay the options side by side for your actual numbers.
What lenders ask retirees for
- Social Security: your award letter and recent bank statements showing deposits
- Pension or annuity: a benefit statement or award letter
- IRA or 401(k) distributions: recent account statements and proof the distributions are set up
- Asset depletion: two or three months of statements for each account you’re using
- Every loan: ID, credit, and proof of down payment and reserves
Before you apply: five retirement-specific questions
- Will this be your full-time home? Primary residences get the best terms; second homes and rentals need more down.
- Are you downsizing? Sale proceeds can cover a large down payment, which opens more programs.
- How is your credit? Paid-off debts are great, but a thin recent credit history can lower your score; check it early.
- What’s your debt-to-income? Lower fixed income makes the DTI math tighter; asset depletion can close the gap.
- Do you want a payment at all? If not, compare a reverse mortgage with a traditional loan.
About this article: Save Financial is a California-licensed independent mortgage brokerage (NMLS #377740, DRE #01875766) in business since 2009, with offices in Newport Beach and Marina del Rey, serving all 58 counties. We have closed hundreds of non-QM loans and shop 20+ wholesale lenders to match you with the right program. This article is general education, not a loan offer or commitment to lend. For a real quote, apply online or call 949-379-5320.