Qualifying for a mortgage after retiring can pose some unique challenges, but they can be overcome, and we can help!
After retirement, many couples decide that they need to downsize or relocate. Perhaps their current house is too big or has too many stairs, or they want to move to be closer to their grandkids. Whatever the reason, if you’re retired and want to buy a new home, qualifying can pose some unique challenges. But these can be overcome, and we can help!
Whether you’re 29 or 99, mortgage lenders still consider the same factors as anyone else when determining whether or not you have the ability to repay your mortgage. So you may discover that qualifying for a loan is a little different from the last time you bought a home.
Using Different Types of Retirement Income
For those who have retired, it can be frustrating because you can have a significant amount of money but show very little income. You may be getting income from Social Security, or you may be receiving IRA distributions, a pension, or a combination of all three. Understanding how these different forms of income can be used to assist in qualifying for a mortgage, as well as the documents required to qualify, will help when it comes time to apply.
- Social Security – Once you start receiving these benefits, you can use this income to qualify. You just need to receive your first check before closing. Also, you will need to save a copy of your Social Security award letter and present copies of the most recent pay stubs. If your Social Security is sent via direct deposit, you will need to provide your two most recent bank statements.
- Retirement Income and Pension – Be sure to keep a copy of your retirement award letter. This can be used to verify the beginning date for your income and how long it will last. Again, you’ll need to provide your most current bank statements and your 1099’s for the last two years.
- 401k, IRA, and Keogh retirement distributions – A mortgage lender will typically want to see a two-year history of receiving income if you have started taking distributions of retirement income. They will also want to verify that you have enough of a balance remaining to continue receiving this income for up to three years. Also, you will need to provide proof of receiving the payment for at least the past two months and the last two years of your 1099’s.
- Disability income – A lender will want to verify the status of your disability, as well as confirm that this income will continue for at least three years. If you have a disability award letter or anything else that attests to the fact that your disability is either permanent or temporary, you should provide copies to the lender.
You may have other forms of income that can be used when applying for a mortgage. Ask your Sean Z mortgage expert for more details about which loan will work best for your circumstances. We are committed to making sure that you can receive the funding you need.
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The Sean Zalmanoff Mortgage Team specializes in making the home purchase or refinance process a great experience.