Many situations can lead someone to buy a home when they are retired. Maybe you want to be closer to your children, grandchildren, or family. Or maybe you want to move somewhere where you can pursue your hobbies or interests like golfing, fishing, or being outdoors. Whatever your reasons may be, if you’re thinking you may want to purchase a home while you’re retired, you’re probably wondering what the process looks like. Here is what you need to know.
Can You Purchase a Home When You Are Retired?
First and foremost, let’s get the confusion out of the way. Yes, it is possible to buy a home when you’re retired. You do not need a regular nine-to-five job to be eligible for a home loan. However, you will need proof of a steady income. You will also need good credit, a low debt-to-income ratio, and will most likely need to make a downpayment of some sort.
Types of Retirement Income for Buying a Home
If you are retired, chances are, you still have some type of income even though you no longer go to work. Many retired people get their income from:
- Social security payments
- Trust distributions
- Roth IRA
- Spousal support/survivor’s benefits
- Annuity income
- Rental properties
Wherever your income is coming from, you will need to provide proof to your lender that it is there. Additionally, some types of retirement income are considered finite sources because they are depreciating assets. If this is the case, you will need to have at least three years’ worth of income in the account.
Other Factors to Consider
In addition to verifying income, there are other factors retirees may want to consider when planning to purchase a home such as:
If you own the property you’re currently living in, you may want to consider checking into your equity. Maybe you have enough equity in your home to where you may not have to take out a mortgage to buy a new one.
Help from Family
If you’re having trouble qualifying for a home loan because of your income, you could try asking your family for help. Maybe a family member is willing to co-sign on your loan. Or perhaps they’d be willing to give you some money in the form of a gift fund that you can put towards your purchase.
Another important factor to consider is your new mortgage term. While many lenders are okay with 10 or 15-year loans, it can be difficult for a retiree to qualify for a 30-year mortgage. The biggest difference here is that with a shorter loan term, you have higher monthly payments.
Retired and Looking to Purchase a Home?
We can help! Call Mortgage Solutions Financial today to speak to an expert and get started with the process!