Policy changes at Fannie Mae and Freddie Mac may make it easier for older homebuyers to obtain mortgages, after the two government-sponsored entities announced new rules allowing lenders to consider retirees’ assets.
Stricter mortgage eligibility requirements have restricted many older homebuyers’ ability to qualify for a mortgage, says an AARP Bulletin, even when prospective borrowers have “substantial” assets, including Social Security income, pensions, and other investments.
“But that scenario is changing,” writes AARP. “New options are in place for retirees who want to downsize but still need a mortgage, and for people who’d hoped to age in place with a smaller refinanced loan.”
With Fannie and Freddies’ changed policies, loan officers can calculate borrowers’ income eligibility—and factor in IRA, 401(k), and other retirement assets along with fixed income.
“This could open up the door for more older borrowers who want a conforming, conventional mortgage,” Freddie Mac spokesman Brad German told AARP.
Written by Alyssa Gerace