Relocating for Retirement? Here’s How to Make Homebuying Easy

Retirement comes with one enormous question: where do you want to spend your golden years?

Do you want to move closer to your children and grandchildren? Buy a home on a golf course in Florida? Become a snowbird and spend winters somewhere warm? Downsize into a smaller house in the same town you have known and loved for decades? Or move somewhere completely new and start the next chapter in a place you have always wanted to live?

For some retirees, the answer is a new state. For others, it is a new home a few miles away. The decision is personal, but the opportunity is the same: retirement gives you the freedom to choose a home around the life you want now.

Once you know where you want to go, the next question is how to make the move happen while preserving the wealth you spent your career building.

Many retirees have substantial retirement accounts, investment portfolios and equity in their current homes, even if they no longer have the salary they earned during their working years. That creates several ways to finance the next house.

Asset depletion mortgages can use retirement and investment assets to help qualify for a mortgage without liquidating the portfolio. Buy Before You Sell financing can unlock equity from the current home so you can purchase the next one before selling.

Whether the plan is Florida, North Carolina, a smaller home in New Hampshire or the right house across town, the right mortgage structure can make the move much easier.

Your Retirement Home Should Fit the Life You Want

There is no universal definition of downsizing in retirement.

For one couple, it means selling a 5-bedroom house in New Jersey and buying a 3-bedroom home in Boca Raton. For another, it means leaving the house where they raised their children but staying within 10 minutes of the same friends, doctors, restaurants and community they have known for 30 years.

Someone else may decide that retirement means looking out over a golf course every morning. Another couple might want a home near the grandchildren in North Carolina. And plenty of people are not ready to choose one location at all—they want to keep their northern home and spend every winter in Florida.

The point of retirement is that you now get to make that choice around your life.

The mortgage should follow that decision, not drive it.

That is particularly important because buying a home after retirement can look different from buying one at 45. Your financial strength may now sit in a brokerage account, IRA, 401(k), pension and home equity instead of salary and bonuses.

That does not make those assets less valuable. It means you need a mortgage that knows how to use them.

Retirement mortgages can combine Social Security, pensions, retirement distributions and investment assets to build the qualification around the wealth you have accumulated.

For many high-net-worth retirees, asset depletion becomes the centerpiece of that strategy.

Asset Depletion Mortgages Let Your Retirement Portfolio Help Buy the House

An asset depletion mortgage uses eligible assets to create qualifying income for the mortgage.

The lender reviews assets such as brokerage accounts, stocks, bonds, mutual funds, cash and eligible retirement accounts, then applies a formula that converts a portion of those assets into monthly qualifying income.

That means the portfolio you spent decades building can now help you qualify for the home where you want to spend the next phase of your life.

Consider a couple leaving New Jersey for Florida.

They may have $3 million or $4 million spread between retirement and brokerage accounts, along with Social Security and perhaps a pension. They could sell a large portion of the portfolio and buy the Florida house in cash.

But they can also explore an asset depletion mortgage in Florida, finance part of the purchase and keep significantly more of their retirement portfolio invested.

The lender uses the assets to qualify them for the mortgage. The investments remain theirs.

That can be especially useful for retirees who have intentionally structured their finances around modest distributions. Taking more money out of a portfolio every month just to produce mortgage income may not match the investment, estate or tax strategy they built with their financial advisor.

Asset depletion gives the mortgage another way to view the same financial strength.

You Do Not Have to Sell Investments to Buy Your Retirement Home

There is a major difference between having $2 million available and deciding that $2 million belongs in the house.

Retirees are often in the enviable position of having choices.

You may be able to pay cash. You may be able to put 50% down. You may also be able to finance 70%, 75% or 80% of the property and keep a much larger pool of money invested and available throughout retirement.

We recently helped retirees purchase a roughly $1.6 million home in Texas with a $1.27 million asset depletion mortgage, financing about 80% of the purchase price.

That is a useful reminder that moving in retirement does not always mean buying a less expensive home.

You might sell the large suburban house and buy something smaller on the water. You might trade square footage for location. You might move into new construction, a golf community or a luxury condo with amenities and less maintenance.

For those purchases, a jumbo asset depletion mortgage can allow a retiree to qualify for a larger loan using investment and retirement assets rather than moving a seven-figure amount out of the portfolio.

The right down payment depends on the rest of your financial plan. Putting more money down can lower the loan amount. Putting less down can preserve liquidity for investments, travel, renovations, healthcare, family gifts or whatever else you want your retirement assets to accomplish.

Different jumbo and Non-QM mortgage down payments can produce very different pricing and qualification results, so the goal is to find the point where the mortgage, liquidity and investment strategy work together.

Buy Before You Sell Lets You Make the Move in the Right Order

Your current home may also represent one of the largest assets on your balance sheet.

That creates another opportunity.

Suppose you have lived in northern New Jersey for 25 years and have $700,000 of equity in the house. You find the Florida home you want to buy, but most of the cash you plan to use for the new purchase is still sitting inside the New Jersey property.

You could sell first.

But that means the timing of your retirement move is now dictated by the sale of your current house. You may need temporary housing. You may move twice. You may feel pressure to accept an offer because the next purchase depends on it.

A Buy Before You Sell structure changes the order.

You use the equity in the departing home to help fund the new purchase, buy the next house, move into it and then sell the old home.

For a retiree, that can make the transition far more comfortable.

You can get the Florida house ready before moving in. You can spend time sorting through the home where you lived for decades instead of emptying it over a frantic weekend. You can stage and market the old property properly. And you can move once—from the old home directly into the new one.

You are using equity you already built to control the timing of the move.

A New Hampshire Couple Combined Buy Before You Sell With Asset Depletion

One recent New Hampshire retirement move shows how well the 2 strategies can work together.

A retired couple wanted to purchase another home in Hopkinton, New Hampshire while they still owned their existing residence.

Their departing home was worth just under $950,000. They used a $540,000 bridge loan against that property to access equity before selling it.

They then purchased their next home for about $1.18 million with a roughly $709,000 asset depletion mortgage. The bridge financing supplied nearly $500,000 toward the new purchase.

This is what retirement financing should look like when the pieces are structured together.

The bridge loan gave them access to the wealth sitting in their current home.

The asset depletion mortgage allowed the wealth in their investment portfolio to support qualification for the new mortgage.

And the combination allowed them to buy the new home before selling the old one.

They did not have to leave the community they loved. They did not have to sell first. They found the home that fit the next stage of their lives and structured the financing around the move they wanted to make.

For retirees right-sizing within the state, New Hampshire asset depletion loans can create the same type of flexibility when significant wealth sits in retirement and investment accounts rather than employment income.

Moving Somewhere New Can Be Just as Easy

Retirement also gives people a reason to look at places they may never have considered while they were working.

North Carolina has become attractive for retirees who want mountains, golf, four seasons, access to growing cities or a little more space. Some want Asheville and Western North Carolina. Others want Charlotte, Lake Norman, Raleigh, the coast or Pinehurst.

We recently helped a retiree purchase a roughly $743,000 home near Asheville, North Carolina with a $594,000 asset depletion mortgage.

The borrower had already accumulated the assets needed to support the purchase. The mortgage was structured around those assets rather than requiring the borrower to return to the income profile they had during their working years.

That is precisely where a North Carolina asset depletion mortgage can fit into a retirement move.

Your portfolio becomes part of the financing strategy, which allows you to preserve more of the assets that are intended to fund the rest of your retirement.

Snowbirds Can Buy First and Decide What Comes Next

Not every retirement move needs to be permanent on day one.

Maybe you think you want to leave New Jersey for Florida, but after living in the same town for 30 years, you are not ready to put the house on the market yet.

So don't force the decision.

Buying a Florida home while keeping the northern residence can give you the chance to experience the snowbird lifestyle before deciding whether one home will eventually become permanent.

Spend January through March in Florida. Head north for spring and summer. Keep the home where your children still come for Thanksgiving. See how you like the rhythm.

The mortgage can be structured around that plan.

Depending on occupancy and the loan program, asset depletion can be used to help finance primary residences and second homes. That opens the door for retirees with substantial portfolios to purchase a warm-weather home without first liquidating investments or immediately selling the house they have owned for decades.

Later, you can decide whether to keep both, sell one or make the move permanent.

That choice is part of the value.

Asset Depletion Works Especially Well for Retirees Because Liquidity Matters

Retirement planning does not stop when you buy the retirement home.

You still have decades of financial decisions ahead of you.

You may want money available for travel. You may help children or grandchildren. You may want to invest in another property. You may need funds for renovations or healthcare. You may want to keep a larger cash reserve because having liquidity makes you comfortable.

A mortgage can help preserve that flexibility.

If buying a $1.5 million home in cash leaves $2 million invested, while financing the home leaves $3 million invested, that extra $1 million remains available to serve the rest of your retirement plan.

That does not mean everyone should maximize the mortgage. It means the down payment deserves the same thought as the rest of the portfolio.

The requirements for an asset depletion mortgage vary by lender, including how different assets are valued, how much must remain after closing and how the qualifying income is calculated.

Those differences can change both the loan amount and the amount of money you need to bring to closing.

Homes Above $1 Million May Be in Jumbo Loan Territory

If you are looking at homes above $1 million, there is a good chance you may be getting into jumbo loan territory depending on the property location and the amount you plan to finance.

Asset depletion can work with jumbo mortgages too. A jumbo asset depletion mortgage allows eligible retirement and investment assets to help you qualify for a larger loan without relying on employment income.

For retirees buying a higher-priced home, the strategy is the same: use the assets you have built to qualify while deciding how much you want to put down and how much you want to keep invested.

Asset Depletion and No-Ratio Loans Give Wealthy Retirees Different Ways to Qualify

For many retirees with substantial liquid portfolios, asset depletion is an excellent fit.

There are also borrowers whose wealth sits differently.

Someone may own several properties but hold fewer liquid investment assets. Another borrower may have a substantial portfolio, but the asset depletion formula does not generate enough income for the size of the mortgage they want. Another may want a loan structure that does not calculate debt-to-income at all.

A No-Ratio Loan can solve those situations by qualifying the transaction without a traditional income or debt-to-income calculation.

Both programs recognize the same basic reality: financial strength is bigger than a paycheck.

The distinction between asset depletion and No-Ratio Loans comes down to where your wealth sits, how much you want to borrow and which structure makes the best use of your balance sheet.

For a retiree with several million dollars in stocks and retirement accounts, asset depletion may produce an excellent result. For someone whose wealth sits primarily in real estate or whose desired loan exceeds what the depletion calculation supports, a No-Ratio Loan may open another door.

Working With a Mortgage Broker Gives Retirees More Ways to Structure the Move

Retirement mortgages are an area where lender selection matters.

Asset depletion formulas vary from lender to lender. The same investment portfolio can produce different qualifying income depending on the program. Jumbo loan limits, down payment requirements, reserve requirements and treatment of retirement accounts can also vary.

Then add a departing residence and Buy Before You Sell financing, and the transaction has multiple moving pieces that need to work together.

A mortgage broker can compare those structures rather than asking you to redesign your retirement plan around one bank's guidelines.

The goal is to determine how much you can borrow, how much equity you want to use from the old home, how much you want to put down and how much of the portfolio you want to keep invested.

Why Retirees Work With LendFriend Mortgage

At LendFriend Mortgage, we regularly structure mortgages for retirees whose wealth sits in retirement accounts, brokerage portfolios and real estate equity.

That experience becomes valuable when a retirement move involves more than one decision.

Maybe you want to buy in Florida before putting the New Jersey house on the market. We can evaluate Buy Before You Sell.

Maybe you have several million dollars invested and want to keep the portfolio intact. We can compare asset depletion lenders.

Maybe the retirement home is a $2 million property and you want to preserve liquidity. We can evaluate jumbo asset depletion programs and different down payment structures.

Or maybe asset depletion does not create enough qualifying income for the home you want. We can compare a No-Ratio Loan instead.

The objective is to build the mortgage around the retirement you want to have.

The Bottom Line

Retirement gives you the opportunity to ask a question that may have been secondary for most of your working life:

Where do you want to spend your golden years?

Near your kids. On a golf course. In Florida every winter. In the mountains of North Carolina. In a smaller house 5 minutes from the friends and community you already love.

Once you answer that question, the financing can follow.

Asset depletion mortgages can use the retirement and investment assets you spent decades building to help you qualify for the next home. Buy Before You Sell financing can unlock the equity in your current house so you can purchase before you sell. Jumbo asset depletion mortgages can extend the strategy to higher-priced retirement homes.

You built the portfolio. You built the home equity. You earned the ability to choose what retirement looks like.

Now you can use those assets to help buy the home where you want to enjoy it.