A 65-year-old should buy a house if they have a stable, long-term plan to stay for at least 5+ years, sufficient cash for a large down payment to keep mortgage payments low, and funds for maintenance. While it offers stability, equity, and customization, it risks tying up retirement savings in an illiquid asset.
If you're 65, you're not too old to buy a house — provided you have the finances to make a down payment, cover your monthly mortgage payments, and keep up with expenses like maintenance and property taxes. In fact, the Equal Credit Opportunity Act forbids mortgage lenders from discriminating based on age.
Reality: Renting can be more affordable and free up cash for travel, hobbies, and other life goals. More adults 50-plus are choosing flexibility over mortgages because, for many, “home” is more about lifestyle than ownership.
In 1998, 26% of Americans ages 65-74 held home-secured debt such as mortgages, yet by 2022, that grew to 32.2%. 1 This trend is particularly pronounced among those ages 75 and up, with 27.6% holding home-secured debt in 2022, up from 11.6% in 1998.
Despite laws prohibiting lending discrimination on the basis of age, it can still be challenging for older people to qualify for financing. According to a 2023 research paper out of the Federal Reserve Bank of Philadelphia, the rejection rate for mortgage applications rises steadily as people age.
Pros of Purchasing a Home After Age 60
You can use equity to cover various needs, such as home repairs or paying off debt. In addition, the more equity you have, the more potential profit you'll make by selling your home. Therefore, building equity gives you financial leverage in numerous situations.
The 30/30/3 rule is a conservative guideline for home buying: save 30% of the home's value for a down payment and buffer, keep your total monthly housing costs (PITI) under 30% of your gross monthly income, and ensure the total home price isn't more than 3 times your annual gross income to build financial resilience and avoid overextending yourself. It's designed to create financial breathing room for emergencies and other goals, preventing the pitfalls seen during the 2008 crisis.
Red flags when buying a house include structural issues (foundation cracks, sloping floors), water problems (stains, musty smells, basement flooding signs, poor drainage), sloppy renovations (fresh paint covering damage, crooked finishes, DIY work), bad maintenance (old roof, deferred upkeep), and listing/market oddities (long time on market, multiple price drops, little info). Always get a professional inspection to uncover hidden issues with major systems like electrical, plumbing, HVAC, and roofing before buying.
A reverse mortgage, also known as a home equity conversion mortgage (HECM), is the most common mortgage taken out by seniors: Backed by the FHA, it allows homeowners 62 and older to borrow against their home's value.
The 5-Year Rule states the investor must own the property for at least 2 of the 5 years preceding the sale before they can claim the § 121 exclusion and of those 5 years they must have lived in it as their primary residence for at least 2 years.
Reasons for buying a home in retirement
Adds to your assets: Real estate is generally a solid investment. Buying a home at any age, whether it's a primary residence or not, can help you diversify your assets. You can also rent it out to supplement your income.
For example, age can be considered in a valid credit scoring system but it can't disfavor applicants 62 years old or older. However, the scoring system may favor applicants 62 years or older. Age will be considered when applying for a Home Equity Conversion Mortgage , which is a type of Reverse Mortgage.
55 years old: Almost all lenders will require a written exit strategy, evidence of your superannuation and other assets that can be sold to repay the proposed debt. 60 years old: Most banks are likely to decline your application due to your age.
In real estate, the 80/20 rule means a home you love will likely meet around 80% of your expectations, while the remaining 20% may consist of compromises, imperfections, or aspects that need changing. The key is to focus on the 80% you adore rather than getting hung up on the 20% you don't.
And by age 60, you should have six to 11 times your salary saved in order to be considered on track for retirement. For example, a 35-year-old earning $60,000 would be on track if she's saved about $60,000 to $90,000.
About 40 percent of all U.S. households where the head of the household is between 35 and 64 are expected to run short of money in retirement, according to a 2019 report by the Employee Benefit Research Institute.
Key Points. The 4% rule is a popular strategy for managing retirement savings. Suze Orman thinks 4% may be too aggressive a withdrawal rate today. She recommends a more conservative approach coupled with other means of attaining financial security in retirement.
Moynes refers to as the 3 D's: depression, divorce, and cognitive decline. This period can be incredibly challenging as retirees struggle to find a new sense of purpose and direction without the familiar structure of their careers.