Common challenges
Fixed-income borrowers get tripped up by continuance rules: lenders need proof the income will last three more years, and recently started pensions or disability payments can be questioned without an award letter.
Programs that fit
Conventional Loans
A conventional loan is a mortgage not insured by the government that follows Fannie Mae or Freddie Mac guidelines.
FHA Loans
An FHA loan is a government-insured mortgage that allows 3.5% down with a credit score of 580 or higher, or 10% down with a score from 500 to 579.
VA Loans
A VA loan is a mortgage guaranteed by the Department of Veterans Affairs that lets eligible veterans, active-duty service members and certain surviving spouses buy with no down payment and no monthly mortgage insurance.
Asset Depletion Loans
An asset depletion (asset utilization) loan converts your liquid assets into a monthly qualifying income, typically by dividing eligible assets by a set number of months, so retirees and investors with savings but little paycheck can qualify..
Tips before you apply
- Bring your Social Security or pension award letter showing the amount and that it continues, this satisfies the 3-year rule.
- Non-taxable income (most Social Security, VA disability) can be grossed up 25% for qualifying.
- If benefits alone fall short, asset depletion can layer retirement savings on top as additional qualifying income.
FAQ
What is the best mortgage for retirees on social security & disability income?
It depends on your documentation and goal. The programs that most often fit are Conventional Loans, FHA Loans, VA Loans, Asset Depletion Loans.