Best Home Loans for Seniors on Social Security | 2025

Secure a home loan as a senior citizen

If you're a senior who relies on Social Security as your primary source of income, the thought of securing a home loan can be daunting. 

However, there are home loans for seniors on Social Security specifically designed to meet your unique financial needs. This is particularly relevant for many retirees and seniors interested in purchasing a vacation home, downsizing, or tapping into their home equity. 

Fortunately, the market offers a variety of home loan options for seniors on Social Security, and here's what you need to know.

In this article (Skip to…)

• Senior home loans
• Eligible income sources
• Senior mortgage options
• Senior mortgage alternatives
• FAQ

Can a senior get a home loan?

Yes, seniors on Social Security can get a mortgage. Social Security Income (SSI) for retirement or long-term disability can typically be used to help qualify for a mortgage loan. That means you can likely buy a house or refinance based on Social Security benefits, as long as you’re currently receiving them. 

However, when applying for a mortgage, lenders will evaluate several factors, including your loan-to-value ratio, income, assets, debt-to-income ratio, and credit score to determine eligibility and loan terms.

• SSI should be counted along with retirement funds and other liquid assets to calculate the borrower’s total qualifying "income"
• Since Social Security income is typically non-taxable, it can also be "grossed up." That means the lender can increase the qualifying amount by 10% to 25% and help you qualify for a larger monthly mortgage payment
• For a lender to count Social Security income toward your mortgage, it will need to be documented via an SSA Award letter or proof of current receipt

If the borrower is drawing Social Security income from another person’s work record, they’ll need to provide the SSA Award letter and proof of current receipt, as well as verification that the income will continue for at least three years.

Types of income considered for senior home loans

When applying for a mortgage loan, lenders typically look at several types of income to determine your ability to repay it. Here are some examples of income that is generally accepted as qualifying for a senior mortgage loan:

• Retirement income: If you receive retirement income, including Social Security, 401(k), traditional IRA, Roth IRA, long-term disability, pensions, or annuities, lenders may consider this as part of your overall income
• Dividend and investment income: If you have investment accounts, such as dividend stocks or bonds, lenders may consider the income you receive from these investments as part of your overall income
• Salary or wages: This is the most common type of income and includes the regular pay you receive from your employer
• Self-employment income: If you're self-employed, lenders may look at your business income as part of your overall income
• Bonuses and commissions: If you receive bonuses or commissions as part of your job, lenders may consider this as part of your income
• Rental income: If you own rental properties, lenders may consider the rental income as part of your overall income
• Alimony and child support: If you receive alimony or child support payments, lenders may consider this as part of your income

It's important to note that lenders may have specific requirements for each type of income, and some may be considered more reliable than others. For example, lenders may require documentation of self-employment or rental income, and they may look at the stability and consistency of your income sources.

Home loans for seniors on Social Security

Retirees and seniors enjoy a wide range of mortgage loan options. Beyond products like conventional mortgages and asset depletion loans, there are a number of government home loans for seniors on social security. These include FHA, VA, and USDA loans.

Additionally, state and local housing agencies often provide specialized home loans for seniors that feature flexible qualifying criteria and possible assistance with down payments and closing costs.

As previously noted, seniors with sufficient assets, retirement savings, or investment accounts can readily overcome the income requirements for mortgage approval. Below are some common home loans for seniors on Social Security or other income sources.

Conventional loans for seniors

Seniors relying on Social Security income may qualify for home loans for seniors on Social Security through Fannie Mae and Freddie Mac. These conventional loans require good credit and occasionally a larger down payment.

Fannie Mae senior home buying program

Fannie Mae allows borrowers to use eligible retirement income to qualify for a home loan for senior citizens under certain conditions. If they’re already withdrawing from a 401(k) or similar retirement account, they must prove the income will continue for at least three years and provide supporting documentation. If they haven’t started withdrawals, lenders can estimate potential income from the asset.

Freddie Mac senior home buying program

Freddie Mac also offers home buying programs for seniors with strong assets but limited income. Lenders can count IRAs, 401(k)s, lump-sum retirement distributions, and business sale proceeds as qualifying assets. To be eligible for mortgages for senior citizens, Freddie requires funds to be fully vested, penalty-free, and not already used as income.

Government home loans for seniors

FHA loans

Those searching for first-time home buyer programs for senior citizens may qualify for FHA loans. The Federal Housing Administration insures these loans, which have more flexible requirements than conventional mortgages. First-time buyers and those seeking new home loans for seniors can qualify using Social Security income. Typically, they need a down payment of 3.5% if their credit score is 580 or higher. FHA loans for seniors also require mortgage insurance premiums.

VA loans

For veterans or spouses of veterans, the Department of Veterans Affairs offers VA loans with several benefits, such as no down payment and no private mortgage insurance (PMI). Lenders will accept Social Security income to meet VA loan requirements, making these the perfect government loans for senior citizens with military backgrounds.

USDA loans

For rural home buyers, the US Department of Agriculture offers USDA loans. These government home loans for senior citizens require no down payment and accept Social Security income. To qualify for USDA loans, applicants must fall within specific income brackets, as the program is designed to serve moderate- to low-income families buying in rural areas.

Specialized home loans for seniors

Bank statement loans

Bank statement loans help senior citizens qualify for a home loan using bank statements instead of W-2s or pay stubs. These are ideal for borrowers with Social Security income, retirement accounts, or rental income.

• Income proof: 12-24 months of bank statements
• Requirements: A solid credit score and cash reserves for monthly mortgage payments
• Property types: Primary residence, second homes, and investment properties

Expect higher interest rates and a down payment of 10-20%, but most lenders won’t require private mortgage insurance (PMI). Since big banks rarely offer these, check credit unions and non-bank mortgage lenders.

Asset depletion loans

An asset depletion loan allows borrowers to qualify for mortgages for seniors using liquid assets instead of traditional income sources. This option works well for retirees with significant financial reserves. Lenders divide the total value of qualifying assets over a set period, usually 360 months, to determine a monthly income for mortgage eligibility.

Example: A lender divides $1 million in savings by 360, resulting in a qualifying income of about $2,700 per month.

Eligible assets

• Checking and savings accounts
• Money market accounts
• Certificates of deposit (CDs)
• Stocks, bonds, and mutual funds
• 401(k) and IRA retirement accounts
• Annuities

Required documentation

• Bank statements
• Tax returns
• 1099 forms
• Retirement award letters

You’ll need a substantial amount of savings to qualify for an asset depletion loan, but it’s a flexible option for those looking for senior home loans without a steady retirement income.

Reverse mortgage loans

A reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM), allows homeowners 62 and older to turn home equity into cash without monthly payments. The loan is repaid when the home is sold or is no longer the borrower’s primary residence.

To qualify, you must be 62 or older, have substantial home equity, and complete HUD-approved counseling. This type of loan provides tax-free cash for living expenses or home improvements without affecting Social Security or Medicare benefits.

However, there are risks. Interest and fees add to the loan balance, reducing home value over time. Borrowers must still cover property taxes, insurance, and maintenance to avoid foreclosure.

For some, a reverse mortgage can improve their financial situation, particularly those looking for home loans for seniors on social security. Others may find a HELOC, home equity loan, or cash-out refinance a better fit. Speaking with a HUD-approved counselor can help determine the best option.

Senior home buying example: Qualifying for an asset depletion loan

As an example, suppose retiree Michael has $1 million in his 401(k). He has not made any withdrawals.

• Michael is not yet 70½. This is the age at which the IRS requires account owners to start taking required minimum distributions from 401(k)s
• He is living off Social Security income, along with income from a Roth IRA
• To qualify Michael for a mortgage, the lender uses 70% of the 401(k) balance, or $700,000, minus his down payment and closing costs

Note: Fannie Mae also allows borrowers to use vested assets from retirement accounts for the down payment, closing costs, and cash reserves.

Let’s say that after down payment and closing costs, Michael is left with $630,000.

Assuming a 30-year mortgage, that amount of $630,000 can then be used to gradually pay for his mortgage over the next 360 months. That would give him $1,750 a month to put toward a housing payment.

• Amount in 401(k) = $1,000,000
• Qualifying 401(k) funds (70%) = $700,000 
• Funds left after down payment and closing costs = $630,000 
• Monthly mortgage budget ($630K / 360) = $1,750

Though it is not a separate loan type, lenders sometimes call this an asset depletion loan or asset-based loan. Borrowers may still count income from other sources when they use assets to help them qualify.

Michael could use the asset depletion method from his untouched 401(k). And then combine it with the income from Social Security benefits and his Roth IRA to borrow as much as possible.

He does not actually dip into his 401(k) to pay the mortgage. But this calculation proves that he could rely on his 401(k) to pay the mortgage if need be.

Alternatives to traditional mortgage loans for seniors

Navigating the housing market can be complex, especially when it comes to mortgages for seniors on Social Security. However, various mortgage alternatives are available that are tailored to accommodate the financial realities of Social Security recipients.

Home equity line of credit (HELOC)

A HELOC is a revolving line of credit that uses your home's equity as collateral. Social Security income can be used to qualify, but lenders typically require a good credit score and a low debt-to-income ratio. Interest rates are generally variable, and you only pay interest on the amount you borrow.

Home equity loans

Similar to a HELOC, home equity loans use your home's equity as collateral but function more like a traditional loan with fixed payments over a set term. Social Security income can be used for qualification, but a good credit history and a low debt-to-income ratio are usually required. The loan provides a lump-sum amount, which is ideal for large expenses.

Cash-out refinance

A cash-out refinance involves replacing your existing mortgage with a new, larger loan and receiving the difference in cash. Social Security income can be counted towards meeting the lender's income requirements. However, you'll need to have substantial home equity, and lenders may apply additional scrutiny, such as a more in-depth credit check and possibly higher interest rates.

Buy a home with non-taxable income

Another helpful solution for seniors is counting non-taxable income. Social Security income, for example, is typically not taxed. Most lenders can increase the amount of this income by 25%. This is known as "grossing up" (before taxes and deductions) when calculating monthly income.

Although lenders are not required to gross up non-taxable income, most will unless it’s not necessary. Further, the lender may choose to gross up by a smaller percentage, such as 10% or 15%.

Speak to your lender about how it calculates non-taxable income.

Buy a home with investment income

Investment funds can be used to qualify for a mortgage. But lenders likely won’t count the full asset amount. When retirement accounts consist of stocks, bonds, or mutual funds, lenders can only use 70% of the value of those accounts to determine how many distributions remain.

Buy a home with a co-signer

One of the quickest and easiest solutions for seniors with trouble qualifying is to add a co-signer.

Some retired parents are doing this by adding their children or a family member to their mortgage application. A child with substantial income can be considered alongside the parent, allowing them to buy a home even with no regular cash flow. 

Fannie Mae has an increasingly popular new loan program for co-signers. The HomeReady mortgage program allows income from non-borrowing household members, like adult children or family members, to be counted.

To qualify for HomeReady, you must meet the income limit requirements and purchase a primary residence. Vacation homes and investment properties are not allowed. 

Property tax breaks for seniors

One final thing to consider as a senior homeowner is that you may qualify for a property tax break. Rules to claim your senior property tax exemption vary by state. So does the amount your taxes could be reduced. Check with your local tax authority or financial planner for more information.

Qualifying for reduced real estate taxes could help lower your debt-to-income ratio (DTI). Having a lower DTI may increase the amount you can borrow on your new home loan.

“Keep in mind, even if you qualify for tax breaks, taxes will be calculated at the current tax rate in the local area,” says Jon Meyer, loan expert.

Mortgage challenges for retirees and seniors

There’s no age limit to apply for a new mortgage loan, and lenders are prohibited from age discrimination under the Equal Credit Opportunity Act. However, retirees and seniors may still face hurdles when buying or refinancing. Here are some common challenges with senior mortgage loans and how to handle them.

• No regular income: Lenders require proof of steady monthly income to approve a home loan, but most retirees don’t have W-2 wages. Instead, lenders may count 401(k), IRA, and retirement account distributions, Social Security income, pension payments, and investment income. These funds must be accessible without penalties, and borrowers need to show they can cover both monthly mortgage payments and daily expenses.
• Income ending in under 3 years (retirement): When approving a home loan, lenders verify that income will continue for at least three years after closing. If a borrower plans to retire soon, their application may be denied, even with a high credit score or strong retirement accounts. One workaround is not disclosing retirement plans, but borrowers must be certain they can afford the loan on retirement income alone. If an employer confirms an upcoming retirement, the borrower may need to wait until they begin withdrawing from retirement accounts to qualify.
• Accessing retirement funds: Lenders consider 401(k), IRA, and retirement account distributions as depleting assets, which must last at least three years beyond the mortgage application date. Withdrawals before age 59½ may come with penalties, making them ineligible as income. For retirement accounts that hold stocks, bonds, or mutual funds, lenders typically count only 70% of the account value due to market volatility.

Retirees seeking home loans for seniors on social security must navigate these rules carefully to protect their financial situation and maximize their home value.

When does it make sense to get a senior home loan?

Many retirees choose a senior mortgage instead of paying off their loan balance or buying a new home with cash. This can free up savings for other expenses, such as food, transportation, and long-term care, which are among seniors' highest costs.

Other than freeing up assets, there are a number of reasons seniors may be considering financing a new home purchase.

• Sizing down: Empty nesters may size down to minimize square footage, maintenance, and mortgage costs
• Physical challenges: Cleaning and repairs can become physically taxing. Many seniors purchase a new home to cut down on upkeep
• Supplementing fixed income: More and more senior citizens are finding it difficult to live on their fixed incomes. Retirees may decide to sell or refinance their homes, finance a new home purchase, and use the equity cashed out to supplement their income
• Moving to a new area: According to one survey, as many as 40% of retirees are venturing out of their home state looking for better weather, recreation, favorable taxes, and other benefits

If any of the above applies to you, it might be worth it to consider financing a home in retirement.

FAQ: Home loans for seniors on social security

Finding home loans for seniors on social security

Finding the best mortgage for seniors comes down to carefully balancing their monthly income against their monthly debt to ensure financial stability and peace of mind in retirement.

Thankfully, most mortgage lenders have loan programs to help seniors buy homes or refinance their current home. However, not all lenders are experienced in issuing mortgages for seniors on social security.

Prior to choosing a lender, make sure to ask a few screening questions. In addition to getting the lowest mortgage rates, you’ll want to know how the lender qualifies retirement income and calculates qualifying income from assets.

A few questions asked upfront can help you find an experienced lender to process your application and get you the best deal.