Discrimination against credit applicants on the basis of age is prohibited by the Equal Credit Opportunity Act. However, while lenders may not consider age per se when qualifying an applicant, they can look at age-related factors such as whether that applicant's income might drop because they are about to retire.
The road to homeownership is not always easy. Here's another challenge: Once you reach a certain age, it can be harder to secure a mortgage. Especially when you hit 70. That's according to new research from the Center for Retirement Research at Boston College.
Rejection increases with age across the board with lenders. Around the age of 70, rejection rates accelerate. Relative to race and ethnicity, applicant age plays an equal role in mortgage approval.
There's no age limit for getting or refinancing a mortgage. Thanks to the Equal Credit Opportunity Act, seniors have the right to fair and equal treatment from mortgage lenders.
It's possible that you'll be asked to pay higher interest rates as an older borrower. Lenders need to balance out the risk of giving you a big loan in your later years. However, if you're opting for a standard mortgage rather than one specific for pensioners, you could still find a competitive rate.
You made it to retirement. And can now enjoy the perks of freedom, which may include moving closer to the kids, escaping to warmer climes, or downsizing. And if you're looking to buy a house, you might wonder if you can still land a 30-year mortgage when your age is north of 60. The short answer: absolutely!
Generally, a creditor such as a lender or broker cannot use your age to make credit decisions. However, there are exceptions to this rule. For example, age can be considered in a valid credit scoring system. Even then, the credit scoring system may not disfavor applicants 62 years old or older.
No, a creditor such as a lender is generally not allowed to make credit decisions based on your age alone. Lenders are not allowed to refuse to consider income from your part-time employment, pension, and certain other sources.
Buying a home after 60 can make sense if you have sufficient monthly income and find an affordable home. In addition, if you're physically capable of maintaining the home or can pay for extra help, homeownership won't become burdensome.
When you're in your 50s, buying a house might cut into your retirement savings significantly, if it pushes your living costs up much higher. Maximizing your retirement contributions may ultimately net you more money than the cash you'd save by paying off a mortgage in the 15 or 20 years before you retire.
Age doesn't matter. Counterintuitive as it may sound, your loan application for a mortgage to be repaid over 30 years looks the same to lenders whether you are 90 years old or 40.
Rejection Rates:
The average rejection rate of mortgage applications decreased by 2.5 percentage points to 12.1% in 2023, remaining above the 2019 rate of 10.2%. The average rejection rate on auto loans increased by 5.8 percentage point to 11.0% in 2023, the highest rate since the start of our series in 2013.
If you do some simple stats on the table below (Home Ownership Analysis - Google Sheets ) you can see that the average age of those that don't have a mortgage is around 63, compared with an average age of 50 for householders that still have a mortgage.
This could be for a number of reasons, including qualifying factors like assets and debt. If you're managing a lot of debt already, you might not be able to take on a mortgage (or another mortgage), especially if you now have less income in retirement.
The Equal Credit Opportunity Act means creditors cannot discriminate against you based on your age or life expectancy. However, you may find it harder to qualify for a loan with your retirement income since your retirement income may be lower than your working income.
The higher rates of income-based mortgage denials are not only attributable to higher mortgage rates, but also higher home prices, Bankrate senior industry analyst Ted Rossman said. “It's really a double whammy, especially for first-time buyers who don't have any equity that they can trade in,” he said.
Renting is often smart if you expect to move again within a few years. Buying and selling homes is expensive, and your home may not rise in value fast enough to offset those costs.
Once you turn 65 years old (or 59 1/2, in some cases), you can withdraw from your plan without penalty. You could, however, be taxed on the amount. Although you can technically withdraw money from your 401(k) for any reason, you might face a 10% early withdrawal penalty.
There is no age that rules you out of buying a home, thanks to the Equal Credit Opportunity Act, which makes it illegal to discriminate against a mortgage applicant based on how old they are. That means that senior citizens don't have to worry about their age when applying for a home loan.
Getting a mortgage when your only income is Social Security benefits is no different than applying for a home loan when you have a job. You'll need a down payment, proof of income, a qualifying debt-to-income ratio and a viable credit score.
High debt-to-income (DTI)
Before approving you for a mortgage, lenders review your monthly income in relation to your monthly debt, or your debt-to-income (DTI). A good rule of thumb: your mortgage payment should not be more than 28% of your monthly gross income. Similarly, your DTI should not be more than 36%.
Mortgage rates have been historic in their own right during the past few years. The average 30-year fixed rate reached an all-time record low of 2.65% in January 2021 before surging to 7.79% in October 2023, according to Freddie Mac.
In general, credit-scoring models — such as the FICO® and VantageScore® credit scores — look at the age of your oldest and newest accounts and the average age of all your accounts to determine the impact that age of credit history will have on your credit scores.
Examples of lending discrimination include: Denying a mortgage or charging a higher interest rate because the property is located in a majority-minority neighborhood.