Getting a Mortgage After Retirement

Assuming very good credit before retirement, is it difficult to get mortgage financing to be paid by annuity income shortly after retirement?

1 Answer

Mortgage financing after retirement is not impossible to come by if the post-retirement income is sufficient. To be counted, your annuity income must be expected to continue for at least three years. Ditto for other sources of income like pensions, IRA and 401(k) distributions, and of course Social Security benefits.

You'll want to get copies of your award letter or other paperwork proving what your income will be when you retire.

Using a mortgage pre-qualification calculator Next, add up your post-retirement income and your monthly expenses like car payments, credit cards, and other loans. You'll need this information to see how much home you qualify to buy. Prequalification involves running your income, proposed housing, and other obligations through some formulas and determining how much you can afford to spend on housing.

If you know how much you want to spend already, you can input your proposed housing expense and your other expenses into most calculators and find out if you have a good chance of getting approved for a mortgage. Ideally, you want to spend no more than 28% of your gross income on housing and no more than 36% on housing plus other payments.

But what if you don't know how much you want to spend for housing? The nature of these calculations is circular. You want to know how much you qualify to spend, but one of your inputs is your proposed house payment, which you don't yet know because you don't know how much you can spend...

There is one calculator out there that gets around this problem. It's probably the easiest prequalification calculator to use and it's on a site called I'm not a fan of all of their calculators but this one is good and I recommend it. Get your proposed mortgage rate from Mortgage News Daily's current rates, your local property tax rate, and the amount you have available for a down payment and closing costs. The calculator does the rest.

Once you know how much you qualify to spend on your next house, you're in a great position to shop for your mortgage and then your home.