Despite laws prohibiting lending discrimination on the basis of age, it can still be challenging for seniors to qualify for home financing. In fact, a 2023 working paper out of the Federal Reserve Bank of Philadelphia found a link between the rejection rate on mortgage applications and the age of the borrower.
Senior citizens can get mortgage loans just like everyone else – it all depends on income, credit score, and cash available. Even seniors into their 90s can get mortgages if they qualify financially.
Absolutely. The Equal Credit Opportunity Act's protections extend to your mortgage term. Mortgage lenders can't deny you a specific loan term on the basis of age.
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 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.
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.
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.
A lender generally can't deny your loan application or charge you higher interest rates or fees because of your age. This rule applies to various types of lenders when they're deciding whether to give credit, such as an auto loan, credit card, mortgage, student loan, or small business loan.
While lenders aren't allowed to explicitly consider an applicant's age in the mortgage process, they can relate age to other, permissible factors. For example, a lender may consider how close the applicant is to retirement or what mortality risks are involved with this loan.
More Than 10 Million People 65 and Older Have a Mortgage — Here's Where They Make up the Largest Share of Homeowners. Jacob Channel is a Senior Economist for LendingTree.
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.
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.
On the other hand, buying a home after 60 can hurt you financially. For example, if you plan on moving in five years or less, the expenses of homeownership will cost more than the financial benefits. Plus, you'll have to sell or rent out the home when you want to move.
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.
Generally speaking, you should aim to keep your total housing costs to 30% of your income or less. This holds true whether you're working or retired.
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%.
The typical maximum age limit on mortgage products is between 70 and 95, depending on the lender. Although not all lenders have a maximum age on their mortgages, with a few, such as Loughborough, Suffolk and Cambridge building societies, having no upper age limit.
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.
40% of borrowers who took out a mortgage in 2017 will be over 65 when their mortgage matures, according to data from The Financial Conduct Authority (FCA). With 34% of all mortgages now lasting longer than 30 years (compared to 20% in 2007), paying off a mortgage into retirement is becoming increasingly common.
These loans allow for lower monthly payments than shorter-term loans, which can make homeownership more affordable for a lot of people. But if you sign a 30-year mortgage in your 50s and you don't accelerate your payments, then you can pretty much bank on not paying off your home until you reach your 80s.
What Is The Average Home Loan Length? A mortgage allows a borrower a certain amount of time to pay off the loan. The most common amount of time, or “mortgage term,” is 30 years in the U.S., but some mortgage terms can be as short as 10 years.
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.
Despite laws prohibiting lending discrimination on the basis of age, it can still be challenging for seniors to qualify for home financing. In fact, a 2023 working paper out of the Federal Reserve Bank of Philadelphia found a link between the rejection rate on mortgage applications and the age of the borrower.
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.