Retirement Mortgages: How Retirees Can Use Retirement Assets to Buy a Home

Retirement should be the stage of life where you choose where and how you want to live. If that means buying a new home in a new city, why not? Unfortunately, too often, retirees are told they can’t qualify for a mortgage simply because they don’t have a paycheck, even if they’ve spent decades building a strong portfolio of assets. That’s outdated thinking.

Why should retirees be forced to pay cash for a house, liquidating stocks, bonds, and other investments, just because they no longer have a traditional job? There’s a better way. Retirement loans from LendFriend are designed to let you qualify based on the wealth you’ve built—not a paycheck you no longer receive. Carrying a mortgage in retirement isn’t a burden—it’s an opportunity to keep your investments working while still buying the home you want.

If you’re over 55, 60, or even 70, you may be wondering: can I still qualify for a mortgage? The answer is yes. In fact, seniors often have more options than they realize. The challenge isn’t age—it’s how income is documented. Retirees don’t typically have W-2s or recent pay stubs, so lenders turn to other forms of financial stability, including Social Security, pensions, retirement withdrawals, and—when those don’t tell the whole story—asset depletion.

How Lenders Evaluate Seniors For Retirement Mortgages

Lenders aren’t concerned with age—they’re concerned with repayment ability. For retirees, that picture looks a little different than it does for someone still working. Instead of salary and bonuses, your qualifying income may come from:

• Social Security benefits – A reliable and ongoing income source. Lenders may even increase (or “gross up”) this figure by 15–25% if the payments are tax-free, recognizing that it stretches further than taxable income.

• Pension income – Counted if it’s guaranteed for life, often making it one of the most stable forms of retirement income.

• Retirement withdrawals (IRA, 401k, annuities) – If you take regular, documented withdrawals, these can be counted as qualifying income.

These sources often supplement each other, but for many retirees, they still don’t paint the full picture. A couple may have Social Security and a pension, but their main wealth is in retirement accounts they don’t plan to touch for another decade. This is where asset depletion comes in.

Asset Depletion Mortgages: Turning Savings Into Qualifying Income

Asset depletion loans are designed for borrowers who are “asset rich, income light.” If most of your net worth sits in retirement accounts or investments, this method allows a lender to essentially treat those assets as if they were producing a monthly paycheck—without requiring you to actually withdraw the funds.

Here’s how it works in practice:

Imagine a 67-year-old retiree with $1,000,000 in retirement assets, $2,000 in monthly Social Security, and a small pension of $1,000 a month. On paper, their income looks like $3,000 a month. Depending on the home price, that may not be enough to qualify.

With asset depletion, the lender takes the $1,000,000 portfolio and divides it by 60 months (5 years). That creates an additional $16,666 per month of qualifying income. Suddenly, the borrower’s documented income jumps from $3,000 to $19,666 per month—without them spending a dime of their retirement savings. The Social Security and pension income supplement the asset depletion calculation, giving lenders confidence in repayment ability. Assuming you have no other debts, it's more than enough income for a $1M mortgage, even at 2025 interest rates.

This approach is particularly powerful for retirees who want to preserve their nest egg while still financing a home.

Why Asset Depletion Is a Game-Changer for Retirees

The beauty of asset depletion mortgages is that they allow retirees to unlock buying power without jeopardizing long-term investments. Selling stocks or mutual funds to raise income or boost a down payment can trigger capital gains taxes, disrupt growth, and reduce the compounding effect of retirement portfolios. Asset depletion avoids this by using the account value itself as proof of repayment ability.

For retirees who have saved diligently, it can feel frustrating when lenders say “you don’t make enough” simply because your taxable income is low. Asset depletion flips that narrative. Instead of punishing you for living off dividends, distributions, or modest pensions, it rewards the discipline of building substantial retirement accounts.

Asset Depletion vs. Selling Investments

Consider two retirees with identical $1,000,000 portfolios:

• Borrower A sells $800,000 in stocks to buy a house with mostly cash. Their qualifying income remains just $3,000 a month (Social Security + pension) is enough to qualify for the small mortgage. They own more equity upfront but risk tax exposure and lost market growth.

• Borrower B sells $250,000 of their $1,000,000 for a typical downpayment and applies for asset depletion. The lender counts $8,750 per month in additional qualifying income, giving them $11,875 of total income and much stronger approval power without selling 80% of their portfolio.

Borrower B not only keeps their retirement portfolio compounding but also qualifies for a mortgage at a higher purchase price or with more favorable terms. The difference can mean keeping an extra property in play rather than being forced to downsize unnecessarily.

Asset Depletion and Retirement Flexibility

Asset depletion mortgages also create flexibility in how you live in retirement. Want to buy a second home in Florida while keeping your main residence in Texas? Asset depletion can qualify you for both. Looking to relocate near family without draining your 401(k)? Again, asset depletion bridges the income gap.

Even if you never tap the assets being “depleted” for underwriting purposes, the calculation itself is enough to open doors. It’s one of the few financing strategies that rewards liquidity without forcing distribution schedules.

Retirement Mortgages in Practice

Across Texas, Florida, and other retirement destinations, we see the same story repeating itself. In places like Austin, Houston, and San Antonio—or further afield in Orlando, Tampa, and Miami—seniors are buying dream homes, downsizing, or relocating closer to family. They’re using Social Security and pensions as anchors, layering in retirement withdrawals, and relying on asset depletion to fill the gaps. The result is a mortgage strategy that matches their financial reality, tailored to the cities and communities they want to call home, without forcing them to liquidate investments prematurely.

The Bottom Line: Spend Your Golden Years In The Right House

Retirement is about enjoying the freedom you’ve earned by putting your assets to work the way you want. You shouldn’t have to drain investment accounts or sell stock just to prove you can afford a mortgage. The reality is simple: Social Security, pensions, and retirement withdrawals lay the groundwork, but asset depletion is the tool that turns decades of saving into borrowing power. It allows retirees to qualify for larger mortgages, keep their money invested, and avoid unnecessary tax bills.

At LendFriend, we make retirement mortgages straightforward. We build loan strategies around the assets you already have so you can buy or refinance the home you want—without compromising your financial plan. For many retirees, asset depletion is the smarter path to homeownership in retirement.