Buying a House at 65 Years Old: Good or Bad Idea?

By 

Andrew Whytock

Updated 

January 19th, 2021

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Is 65 too old to buy a house? | Buy vs rent | Financing a home in retirement | FAQs

Buying a house is a large investment, no matter how old you are.

You need to look at your financial portfolio and perhaps even speak with a financial advisor to determine whether an investment of this size makes sense for you.

If you have all of your financial ducks in a row and an expert buyer’s agent at your side, there’s nothing stopping you from finding the house of your dreams at any age.

Is 65-years-old too old to buy a house?

If you’re 65, you’re not too old to buy a house — provided that you have the finances to make a downpayment, cover your monthly mortgage payments, and keep up with expenses like maintenance and property taxes.

However, when you’re 65 or older, it is difficult to know if you’ll be able to live in the house long enough to see a good return on your investment.

If you’re retired or close to retiring, you may have a limited income that must support you for an unknown period of time.

When you throw a considerable portion of those assets at a house, you add another unknown variable — the housing market. If the house you purchase does not appreciate, or you can’t keep up with the mortgage payments, you could put yourself in an untenable financial position where you might be forced to sell the house to manage your debt load.

Put extra effort into researching the housing market with a local buyer’s agent. A qualified agent can help stack the deck in your favor by identifying properties that have the best chance of appreciating in value in a short period of time.

Is it better to buy or rent in retirement?

The decision to rent or buy in retirement ultimately comes down to your financial situation and goals. 

With a house, you’ll have mortgage payments and maintenance costs, meaning that you’ll have less disposable income to live off of. Renting, on the other hand, will limit your costs but it will also prevent you from building equity in a home as you age.

Buying in retirement

Buying a house in retirement depends on your assets and your income. If you have to finance a house, understand that adding a mortgage amplifies your financial risk. Even people with a high net worth can lose big by borrowing too much if the house they’re in doesn’t increase in value.

Pros
Cons

Build equity by paying down your mortgage.

You are responsible for paying for property taxes, homeowners insurance, and repairs.

No unexpected rent increases.

Limited mobility — you can’t easily pack up and move if your life situation changes. You’ll have to sell your house.

Customize your living environment with upgrades, renovations, etc.

You may not have enough time for the value of your house to appreciate.

Renting in retirement

If you haven’t purchased a home before, you are probably already weighing the pros and cons of continuing to rent in retirement. Renting isn’t all bad, but it does come with some disadvantages.

Pros
Cons

Flexibility! You can move with very little hassle.

Annual rent increases could gradually make your rental unit too expensive.

No additional expenses like property taxes, homeowners insurance, and repair costs.

You cannot renovate/modify your unit to accommodate mobility restrictions as you age.

Should seniors rent or buy a condo?

Condos are a unique option for seniors to consider, since they can either be purchased like a home or rented from the condo owner. However, you should be aware that condo ownership often comes with additional fees, which might make them a poor option if you're looking to keep monthly costs low. 

The biggest difference between buying a condo and buying a house is that condos come with condo fees. Fees range widely and could be as little as $100 or as high as $700[1] per month and cover the condo association’s ongoing costs to maintain the property.

When you’re living on a fixed retirement income, extra fees like this could really hurt your budget.

Of course, there are some unique advantages to owning a condo, like no exterior maintenance or lawn care.

Purchasing a condo may not be a bad option if you have the financial means to pay for it, just make sure you include the condo fees in your calculation when you’re exploring purchasing options.

Pros and cons of buying a condo in retirement

Pros
Cons

No exterior maintenance or landscaping to worry about.

Condo fees are an added monthly expense on top of your mortgage.

Smaller than most homes so less work for aging owners.

The condo board has a lot of control over the building and could even raise your condo fees.

Ideal for retirees who like to travel because you can easily lock the door and be sure that your residence is secure.

Condos only attract a particular type of buyer, so your unit could be harder to sell than a typical house.

If you aren’t ready to buy a condo, you might be able to rent one. Renting a condo is similar to renting an apartment. The biggest difference is that you’re renting from the condo owner, not a property management company.

The owner generally pays the condo fees and mortgage themselves and charges tenants monthly rental fees. However, because owners have to cover these costs, they might charge their tenants more for occupying the unit.

Financing a home in retirement

While there is no maximum age for applying for a mortgage, you may find it is tougher to qualify for certain mortgage products. 

Discrimination based on age is illegal due to the Equal Credit Opportunity Act.

However, when lenders underwrite a loan, they have to ascertain their risk. Therefore, the proof of income you have to submit when you are retired will be evaluated differently.

Lenders need to confirm that you have access to any assets that you might be using as a downpayment — meaning they’re not locked into a retirement fund. For those in retirement, lenders consider 401(k)s, IRAs, and other retirement account distributions. These assets don’t qualify if they’re currently being used as your only source of income.

This can make things difficult, especially for borrowers whose assets are in retirement vehicles that may be subject to withdrawal penalties.

» MORE: Mortgages for Over-65-Year-Olds: What You Need to Know

If you’re a veteran, be sure to check if you qualify for a VA loan. Another avenue to check if you are having a tough time qualifying with conventional lenders are FHA loans (Federal Home Administration). 

Before applying for financing, make sure your credit is exceptional and that your debt-to-income ratio is low. You’ll have an advantage if you consult a financial advisor and an experienced buyer’s agent who knows the lending procedures in your local market before you apply for financing.

You can also save on your financing by finding competitive mortgage rates in advance. Don't get pressured into taking the first mortgage offer you receive - shop around until you find a lender you're comfortable with who's offering you a great deal. Answer the questions below to get connected with local lenders and kick off the process.

Before you buy

Once you’ve decided to buy, your next step is to contract the services of an expert real estate agent who is familiar with the lenders in your local area and knows what their qualification procedures are for retirees or those nearing retirement. 

This will give you the best chance of educating yourself and getting a better mortgage product with terms that are favorable to you.

Your agent should help you find properties that:

  • Have great potential for appreciation.

  • Need little to no repairs and minimal ongoing maintenance.

Clever Partner Agents are full-service realtors that are strictly vetted to make sure they are the best in their local market. 

When you use the expert services of a Partner Agent, you may even qualify for a buyer rebate to put money back into your pocket, or use to furnish your new home. 

Find a Clever Partner Agent in your desired location today and get started on the search for your perfect retirement paradise.

FAQs about buying a house at 65

What is the average age to buy a house?

According to the National Association of Realtors (NAR), the median age of the typical home buyer is 34[2]. However, the same research shows that 21% of all home buyers are 65 years or older.

What age should you buy a retirement home?

The earlier you purchase a home for your retirement, the more you can take advantage of home equity. This is especially true if you need to take out a mortgage to finance your purchase.

Can a 65-year-old get a 30-year mortgage?

Yes. To base approval on age is discriminatory under Federal law in the United States. If you are applying for a mortgage at 65, chances are that you are both still working and have retirement vehicles which are allowed to be considered in your debt-to-income ratio. This can give 65-year-olds some leverage when applying for a mortgage. 

Make sure you have documentable and stable income and assets to satisfy the credit requirements for the loan program you are applying for.

Can a 70- year-old get a 30-year mortgage?

Yes. Legally banks are only allowed to offer loans based upon financial qualifications. However, while you are working, banks can look at how much your salary might increase in the future. If you are on a fixed income such as social security, with cost-of-living increases, it may not make sense to get a 30-year mortgage. 

It’s wise to sit down with a financial advisor and a good buyer’s agent to consider your best approach to financing a house.

Can an 80-year-old get a 30-year mortgage?

With excellent credit, a low debt-to-income ratio, and a strong financial portfolio, people of any age can get a mortgage. Because seniors can use their retirement assets for the loan they want, this gives them an added opportunity to qualify. 

But at 80-years-old, you need to ask yourself whether getting a 30-year mortgage makes sense.

Consult your financial advisor and an experienced real estate agent to make sure that taking out a mortgage will not put you in a difficult financial position over the long term.

ARTICLE SOURCES
[1]

PocketSense. "Typical Condo Fees." Accessed December 16, 2020. Updated April 19, 2019.

[2]

National Association of Realtors. "2020 Home Buyers and Sellers Generational Trends Report." Page(s) 11. Accessed December 16, 2020.