More and more retirees looking to obtain a home loan may find that solid retirement accounts and a sterling credit rating are not enough.
Lenders increasingly are looking for a consistent monthly income in line with their usual debt-to-income standards. When they look at dividends, most lenders want to see a regular annual amount on the tax return paid out over at least the past couple of years. In terms of part-time employment, borrowers need to prove they are actually working at the moment of application. In some cases, a two-year work history is required.
Social Security income is always counted, of course. Borrowers, though, need to be informed that current Fannie Mae guidelines permit lenders to increase that income by 25 percent if the beneficiary is not paying taxes on it.
A handful of portfolio lenders are still issuing loans without verifying income. However, their interest rates are higher, as are their down payment requirements — which are in the range of 30 to 40 percent.
Source: “Loan Qualifications for Retirees,” New York Times (05/05/13)