Can a 90 Year-Old Get a Mortgage?

Can a 90-year-old obtain a mortgage? Yes, age is not a direct obstacle. Lenders are prohibited from discriminating based on age, focusing on an applicant’s financial capacity to repay. Qualification depends on meeting specific financial criteria, applied uniformly.

Lender Criteria for Mortgage Approval

Lenders assess financial aspects for eligibility and repayment. Income stability and verifiability are primary considerations, originating from sources like wages, self-employment, Social Security, pensions, or retirement account withdrawals. Lenders require documentation proving consistent income.

Credit history and score are fundamental, reflecting financial behavior. Lenders typically look for a solid credit score, generally above 620 for conventional loans. FHA loans can accommodate scores as low as 500 or 580. Responsible credit use demonstrates reliability.

The debt-to-income (DTI) ratio compares total monthly debt payments to gross monthly income. While an ideal DTI is often 36% or lower, many lenders approve DTI ratios up to 45%, with FHA loans extending to 50% or higher. A lower DTI indicates less financial strain and greater ability to manage a new mortgage payment.

Lenders also evaluate assets, including funds for a down payment and reserves. Down payment requirements typically range from 3% to 20% or more. Reserves are emergency funds, usually two to six months of mortgage payments (principal, interest, taxes, and insurance), available after closing. Acceptable asset sources include checking and savings accounts, certificates of deposit, stocks, and vested retirement accounts.

Addressing Age-Related Financial Factors

Lender criteria apply to older applicants, with specific considerations for retirement income.

Social Security and pension income are generally stable and reliable, with no assumed expiration for Social Security. For retirement account distributions, such as from 401(k)s or IRAs, lenders often require proof that distributions will continue for at least three years. Lenders may also consider only a percentage of retirement account value (e.g., 60-70%) due to market volatility.

A notable advantage for older borrowers is the “grossing up” of non-taxable income, like certain Social Security or pension benefits. Because these income streams may be partially or fully exempt from federal income tax, lenders can effectively increase the reported income by 15% to 25% for qualification. This adjustment enhances borrowing capacity without changing the received amount.

A long credit history benefits older applicants by demonstrating responsible borrowing and repayment. Accumulated assets like savings, investments, or home equity can strengthen an applicant’s profile. These assets can serve as a source for down payments, closing costs, and required reserves. They may also be used in an “asset depletion” strategy, converting a portion of liquid assets into an equivalent monthly income for qualification.

Mortgage Options for Older Borrowers

Mortgage options for older individuals include traditional and reverse mortgages.

Traditional mortgages, such as conventional and FHA loans, operate similarly for older borrowers. Conventional loans may require private mortgage insurance (PMI) with smaller down payments. FHA loans are government-insured, offer flexible qualification, and require upfront and annual mortgage insurance premiums (MIP).

A distinct option for older homeowners is the Home Equity Conversion Mortgage (HECM), commonly known as a reverse mortgage. This loan allows homeowners aged 62 and older to convert home equity into cash, without monthly mortgage payments. Borrowers retain ownership but must pay property taxes, homeowner’s insurance, and maintain the property. The loan becomes due when the last borrower leaves the home.

HECMs require mandatory counseling by a HUD-approved agency, ensuring borrowers understand implications and alternatives. Funds can be received as a lump sum, a line of credit, or regular monthly payments. Unlike traditional mortgages, the reverse mortgage balance increases over time as interest accrues and funds are disbursed, reducing home equity.

The Mortgage Application Process

The mortgage application process begins with contacting a lender for pre-qualification or pre-approval. Pre-approval involves a thorough financial review, indicating the loan amount an applicant can afford and setting realistic home shopping expectations.

Once a property is found, applicants submit comprehensive documents. This typically includes two years of W-2s or tax returns, recent pay stubs, and bank statements. For retired individuals, documentation extends to Social Security award letters, pension, and retirement account statements. All funds for down payments, closing costs, and reserves must be verifiable.

Following submission, the application enters the underwriting phase. A mortgage underwriter verifies all information, cross-referencing income, assets, credit history, and ordering a property appraisal. The underwriter assesses loan risk and determines if the applicant meets lender guidelines. This process can take weeks, with additional documentation often requested.

The final stage is closing, typically occurring within 30 to 60 days of application. At least three business days before closing, the borrower receives a Closing Disclosure, detailing final loan terms, projected monthly payments, and closing costs. These costs, ranging from 2% to 5% of the loan amount, include various fees. At closing, the borrower signs legal documents, funds are disbursed, and title is transferred.