Suppose a retiree buys a $375,000 home in the city of Richmond. This is a round illustration, so check current city-level figures on Zillow’s home value pages and through Virginia REALTORS. The buyer has no paycheck, only $4,800 a month from Social Security, a pension, and an annuity. They put $150,000 from a home sale toward the purchase and borrow $225,000. At an illustrative 6.5% on a 30-year fixed loan, principal and interest come to $1,422. Add an assumed $525 for taxes and insurance and the housing payment is $1,947, or 40.6% of the $4,800 monthly income. Lenders can approve that profile.
VA, Conventional, FHA, Jumbo, and refinance loans can all work on retirement income when the income is documented correctly. Duane Buziak, NMLS #1110647, walks retirees through qualifying on retirement income, and the seven strategies below are ranked in practical order, with a recommendation on what to do first at the end.
In this guide
- 1. Qualify on Social Security, Pension, and Retirement Account Income
- 2. Use Retirement Account Distributions or Asset Depletion Income
- 3. Use VA Home Loans if You Served
- 4. Put Down a Large Down Payment From Home Sale Equity
- 5. Compare Conventional and FHA Loans Before Choosing
- 6. Refinance to Lower Your Fixed Payment on Retirement Income
- 7. Get Pre-Approved Early With a Soft Pull and a Document Plan
- Home financing for retirees: ten questions answered
- Where retirees should start
1. Qualify on Social Security, Pension, and Retirement Account Income
Lenders do not need a paycheck. They need income that is documented and likely to continue. Federal law backs this up: the Equal Credit Opportunity Act bars discrimination based on age, and the Consumer Financial Protection Bureau explains how. Retirees can also get 30-year fixed loans. The real task is proving the income.
Two terms matter here. Continuance means the income is expected to last at least three years after closing, a common guideline for pensions, annuities, and distributions. Debt-to-income ratio (DTI) is your monthly debts, including the new housing payment, divided by gross monthly income.
For illustration, take $2,400 in Social Security, $1,800 in pension, and $600 in annuity income. That is $4,800 a month, and every dollar counts toward DTI. Some guidelines allow nontaxable income such as part of Social Security to be grossed up, which can raise qualifying income further. Your loan officer confirms whether that applies.
- Gather your SSA benefit verification letter, pension award letter, and annuity statement.
- Pull two months of bank statements showing the deposits.
- Confirm the three-year continuance for pension and annuity income.
- Ask your loan officer to calculate DTI under each program before you shop.
The common mistake is assuming retirement income does not count, or leaving out the letter that proves it will continue. Measure two things: your DTI ratio, and whether every income source is accepted at pre-approval.
2. Use Retirement Account Distributions or Asset Depletion Income
If you hold a large IRA or 401(k) but draw little from it, that balance can still support a loan. Lenders can count regular distributions you already take. Some programs also use asset depletion, which converts a balance into imputed monthly income by spreading eligible assets over a set number of months.
Here is a simplified illustration, not a quote. Suppose you have a $600,000 IRA and use $150,000 of it for down payment and closing costs. A common formula divides the remaining $450,000 by 360 months, which adds $1,250 a month. Some programs discount volatile assets first, so your result may be lower. Add that to $4,800 and income is $6,050. The $1,947 housing payment from the introduction falls from 40.6% to about 32.2% of income.
- Provide two months of statements for each account.
- Document the distribution schedule, or confirm eligibility for the depletion formula.
- Show the assets will last at least three years after the withdrawal.
- Ask for the DTI result with and without the added income.
The mistake to avoid is withdrawing funds before checking the tax consequences. Traditional IRA and 401(k) withdrawals are generally taxable income, and a large one can push you into a higher bracket or affect Medicare premiums. Talk to a tax professional first. Measure the qualifying monthly income the strategy adds and the after-tax cost of any withdrawal.
3. Use VA Home Loans if You Served
For eligible veterans, the VA loan is often the strongest structure available. Eligible borrowers can buy with no down payment, and there is no monthly mortgage insurance. The VA home loan program guarantees part of the loan, which is why lenders can offer these terms.
Compare two purchases of a $375,000 home at the same illustrative 6.5% rate. With $0 down, the VA loan is $375,000 and principal and interest is $2,370. A 5%-down conventional loan is $356,250, with principal and interest of $2,252 plus roughly $148 a month in PMI (private mortgage insurance, assumed here at 0.5% a year), or $2,400. Cash needed for the down payment is $0 versus $18,750.
The VA funding fee changes the picture. As of 2026, first-use fees with no down payment are around 2.15% of the loan. Financed on $375,000, that adds $8,063 and moves the payment to about $2,421. Veterans receiving VA disability compensation are generally exempt from the fee, so the payment stays at $2,370.
- Request your Certificate of Eligibility (COE) through VA.gov or with Duane Buziak’s help.
- Confirm whether your disability rating exempts you from the funding fee.
- Get pre-approved and compare the VA estimate to a conventional one.
The usual errors are skipping the COE and overlooking the exemption. Measure the monthly payment and the cash to close against the conventional option.
4. Put Down a Large Down Payment From Home Sale Equity
Retirees who sell a longtime home often have more cash than a typical buyer. Putting a large share of it down shrinks the loan, drops PMI, and lowers the DTI that income has to support. Smaller payments matter more on a fixed income.
A labeled illustration: you net $250,000 from your sale. You hold back $40,000 for reserves and closing costs and put $200,000 down on a $375,000 downsized home. The loan is $175,000, and at 6.5% principal and interest is $1,106, with a loan-to-value (LTV) ratio of 46.7%. At 20% down the loan is $300,000 and principal and interest is $1,896. That is $790 a month more. Against the 5%-down conventional payment of $2,400 with PMI, the gap is $1,294.
- Estimate net proceeds after commissions, payoff, and closing costs.
- Set the reserve first, then treat the rest as available for the down payment.
- Compare the payment at 20% down against larger amounts.
The pitfall is draining every dollar into the house. With taxes and insurance, the housing payment above is about $1,631 a month, so $40,000 covers roughly 24 months. Do not go below a reserve you are comfortable with. Measure the monthly payment, months of reserves, and LTV together; improving one at the expense of the others is not progress.
5. Compare Conventional and FHA Loans Before Choosing
When you are not VA-eligible, or your credit or cash is limited, the choice is usually between a conventional and an FHA loan. As of 2026, the conforming limit for most of Virginia is $832,750, so most Richmond purchases fit a standard conventional loan. Larger amounts move into Jumbo territory.
This is where Duane Buziak encourages buyers to Dare to Compare. The table summarizes typical features. Confirm current figures with HUD and your loan estimate.
| Feature | VA Loan | Conventional Loan | FHA Loan |
|---|---|---|---|
| Minimum down payment | 0% for eligible borrowers | 3% to 5% typical | 3.5% with a 580+ score |
| Mortgage insurance | None monthly; funding fee unless exempt | PMI, removable at 20% equity | Upfront and annual MIP |
| Typical credit floor | Set by lender, often 580 to 620 | About 620 | 580 for 3.5% down |
| Duration of insurance | No monthly insurance | Ends when equity builds | Life of loan under 10% down |
Run an FHA example against the conventional one on the same $375,000 home. FHA with 3.5% down is $361,875, plus an upfront MIP of 1.75% that is financed, for $368,208. Principal and interest is about $2,327, and annual MIP, assumed at 0.55%, adds about $169. That totals $2,496 a month against $2,400 for conventional, or about $5,760 more over five years, even at the same rate. FHA wins when credit is weaker, which is a real situation for some retirees.
- Request side-by-side loan estimates for each eligible program.
- Compare total monthly payment, not rate.
- Ask how long mortgage insurance lasts and whether it can be removed.
The mistake is choosing on rate alone. Measure the total monthly payment and the five-year cost.
6. Refinance to Lower Your Fixed Payment on Retirement Income
If you already own, a rate-and-term refinance can cut a payment that your income has to stretch to cover. A lower payment lasts as long as the loan does, which is useful when income rises only with cost-of-living adjustments.
For illustration, suppose a $280,000 balance at 7.25% costs $1,910 a month in principal and interest. Refinancing to 6.5% brings it to about $1,770, saving roughly $140 a month. If closing costs are $5,600, the break-even is 40 months ($5,600 divided by $140). Every month after that is real savings.
- Calculate break-even: closing costs divided by monthly savings.
- Compare no-out-of-pocket closing options, which trade a slightly higher rate for lender credits, against paying costs upfront.
- Confirm you plan to stay in the home well past the break-even date.
Two mistakes come up often. One is refinancing and then moving before break-even. The other is resetting a nearly paid-off loan to a fresh 30 years, which can raise lifetime interest even as the payment falls. Ask for a shorter term if your budget allows. Measure monthly savings and break-even months.
7. Get Pre-Approved Early With a Soft Pull and a Document Plan
Retiree files take more paper than a W-2 file, since each income stream has its own proof. Starting before house hunting turns a scramble into a checklist. NoTouch Credit Pull lets Duane Buziak review your credit profile with a soft inquiry, so you see where you stand before any hard inquiry hits your score.
An illustration: a retiree works through the checklist in one week and receives a pre-approval letter before touring a single home. When the offer is accepted, the underwriter’s requests are already answered, and there is no delay during the contract period.
- Run NoTouch Credit Pull to review your credit profile.
- Collect your SSA letter, pension letter, 1099-R forms, two months of account statements, and two years of tax returns.
- Discuss program options, down payment sources, and reserves.
- Receive your pre-approval letter and shop within that budget.
The most common mistake is waiting to collect documents until after you find a house, when a seller’s deadline leaves little room. Measure the days from application to pre-approval and the number of documentation requests that come back. Fewer follow-up requests mean the plan is working.
Home financing for retirees: ten questions answered
Can a retiree get a mortgage with no job? Yes, a retiree can qualify using documented Social Security, pension, annuity, and retirement account income.
Is it illegal for a lender to deny a mortgage because of age? Yes, the Equal Credit Opportunity Act prohibits lenders from discriminating on the basis of age.
Can retirees get a 30-year fixed mortgage? Yes, lenders offer 30-year terms to retirees who qualify on income, credit, and assets.
Does Social Security count as income for a mortgage? Yes, Social Security counts, documented with an award letter and bank deposits.
Can I use IRA or 401(k) funds to qualify? Yes, either through regular distributions or an asset depletion formula, depending on the program.
What is the three-year continuance rule? It means lenders generally want to see that pension, annuity, or distribution income will continue for at least three years after closing.
What is the maximum DTI for a retiree? It varies by program and approval type, with many conventional and FHA files approved at DTIs in the 40s, so ask for your program-specific limit.
Do I have to pay cash for a home in retirement? No, financing is available, and a larger down payment simply lowers the loan and the payment.
Are veterans exempt from the VA funding fee? Veterans receiving VA disability compensation are generally exempt, which you can confirm with your Certificate of Eligibility.
Does a NoTouch Credit Pull hurt my credit score? No, it is a soft inquiry that does not affect your score.
Where retirees should start
Begin with strategy 1 and strategy 7 together: a documented income review and a soft-pull pre-approval. They show what income counts and what a realistic budget looks like before you commit to anything. Then match the program to your situation. Veterans should price a VA loan first, because the missing down payment and monthly mortgage insurance are hard to beat. Everyone else should use the down payment and comparison strategies to set the structure, and homeowners should run the refinance break-even before deciding. Strategy 2 comes in when a large retirement balance can fill an income gap.
Whether you’re a veteran ready to use your hard-earned benefits or a homebuyer exploring your financing options, your path to homeownership starts with expert guidance you can trust. Connect with Duane today for a personalized consultation and discover the mortgage solution tailored to your unique goals in the Stafford County and Richmond area. Richmond Home Loans by Duane Buziak is ready to review your retirement income.