Can a 75 Year Old Get a Mortgage?

Age and Eligibility Factors

Federal fair lending laws, such as the Equal Credit Opportunity Act (ECOA), prohibit discrimination based on age in credit transactions. Lenders cannot deny a mortgage application solely due to an applicant’s age.

Lenders evaluate all applicants based on their financial capacity to repay the loan, focusing on stable income, credit history, and assets. Older borrowers are assessed by the same financial metrics as younger applicants, though income sources may differ.

Income streams such as Social Security benefits, pension payments, and distributions from retirement accounts like 401(k)s or IRAs are considered legitimate and stable forms of income. Lenders assess the predictability and duration of these income sources to ensure they will continue throughout the loan term. The focus remains squarely on the financial picture, ensuring that the borrower has a reliable means to make their monthly mortgage payments.

Key Financial Qualifications

Lenders review an applicant’s income, assets, credit history, and existing debt obligations to assess their financial profile and ability to manage new debt.

Income is a primary consideration. For older applicants, this often includes Social Security benefits, verified through award letters or bank statements. Pension income, confirmed with statements or direct deposit records, also provides a stable revenue stream. Distributions from retirement accounts, such as 401(k)s or IRAs, are evaluated based on consistent withdrawal patterns and remaining balance, verified with account statements and IRS Form 1099-R. Investment income and earnings from part-time employment also contribute to qualifying income.

Lenders also scrutinize an applicant’s assets, which serve as reserves and indicate financial stability. Liquid assets, like funds in savings and checking accounts, are verified with bank statements. Non-liquid assets, such as investment portfolios or additional real estate, demonstrate broader financial strength and are documented with statements. These assets can provide a safety net and may be considered for down payments or closing costs.

Credit score and history play a significant role. Lenders use FICO or VantageScore models, which summarize creditworthiness based on payment history, amounts owed, length of credit history, and new credit. A long, positive credit history, demonstrating timely payments and responsible debt management, is beneficial. Negative events like late payments or bankruptcies can negatively impact eligibility. Lenders review full credit reports to assess financial behavior.

The debt-to-income (DTI) ratio is another metric, calculated by dividing an applicant’s total monthly debt payments by their gross monthly income. This ratio indicates how much income is consumed by existing debt obligations, such as credit card minimums, auto loan payments, and student loan installments. Lenders prefer a DTI ratio below 43% for conventional loans, though this can vary. A lower DTI ratio suggests a greater capacity to manage additional mortgage payments.

To verify financial details, lenders require documentation from applicants. This includes:
Past two years of federal income tax returns, W-2s, and 1099 forms for income types like Social Security or retirement distributions.
Recent bank statements, covering the last two to three months.
Investment account statements to confirm asset balances and transaction history.
Proof of other income, such as award letters for disability income.

Available Mortgage Products

Various mortgage product options exist for individuals seeking a mortgage later in life, designed to meet different financial goals.

Traditional mortgages are available for older borrowers, including fixed-rate and adjustable-rate options. Fixed-rate mortgages offer consistent monthly payments for predictability. Adjustable-rate mortgages feature interest rates that can change periodically. These loans are used for purchasing a new home or refinancing an existing mortgage, either to secure a lower interest rate or to convert home equity into cash. Loan terms range from 15 to 30 years, with shorter terms resulting in higher monthly payments but less total interest paid.

Home equity products allow homeowners to leverage the equity in their property without selling it. A Home Equity Line of Credit (HELOC) is a revolving credit line, allowing borrowers to draw funds as needed up to a limit, with interest paid only on the amount borrowed. In contrast, Home Equity Loans provide a lump sum upfront, repaid over a fixed term with regular installments. Both products allow access to existing home value for purposes like home improvements or debt consolidation.

A distinct option for homeowners aged 62 and older is a reverse mortgage. Unlike traditional mortgages where the borrower makes monthly payments, a reverse mortgage allows the homeowner to receive payments from the lender, either as a lump sum, monthly installments, or a line of credit. The loan balance grows over time with accrued interest and fees. Repayment is not required until the last surviving borrower permanently leaves the home. This product is designed to help older adults access home equity to supplement income or cover expenses without selling their property.

The Mortgage Application Process

After assessing financial standing and identifying mortgage options, the application process follows a structured path from initial inquiries to loan closing.

The process begins with pre-qualification or pre-approval, providing an early indication of borrowing capacity. Pre-qualification offers an estimate of how much a borrower might afford based on a financial review. Pre-approval involves a thorough check of credit and income, resulting in a conditional commitment from a lender. Obtaining pre-approval can strengthen an offer when purchasing a home.

Selecting the right lender is the next step, with options including traditional banks, credit unions, and mortgage brokers. Each institution offers different rates, terms, and customer service experiences. Mortgage brokers can shop with multiple lenders for competitive offers, while banks and credit unions offer their proprietary products.

After lender selection, the formal application package is submitted. This includes financial documentation like tax returns, bank statements, and income verification. The application can be completed online through secure portals or in person, initiating review.

Upon submission, the application moves into the underwriting review phase. The lender’s underwriting department verifies all submitted information, including income stability, asset balances, credit history, and the property’s appraised value. Underwriters assess the loan’s risk and can request additional documentation or clarification to ensure compliance with lending guidelines.

The final stages involve loan approval and closing. Once underwriting is complete and the loan is approved, the borrower receives a Loan Estimate, detailing the final terms, interest rate, and closing costs. Closing occurs at a title company or attorney’s office, where documents are signed, and the loan is funded.