Home Loans in Retirement. A Complication.

Recurring deposits from an investment account could help.

What keeps retirees with $3 million in their investment accounts from getting approved for a home loan? The short answer is their debt to income ratio. Individuals often see a reduction in their monthly income in retirement as they transition from W2 income to living on Social Security and the drawing down of their investments.

This week, Tyler Schelhaas joins Market Perspective. He is a senior wealth manager at Vector and has been in the financial services industry since 2003. Tyler has found that home loan lenders will consider regular and recurring deposits from an investment portfolio when analyzing the debt to income ratio.

If you are thinking about getting a mortgage in your retirement, talk with your advisor and mortgage officer to learn if recurring deposits from your investment accounts could unlock more favorable mortgage terms.

*Quoted debt to income ratio and the number and frequency of deposits suggested may vary between lenders and an individual’s circumstances.

See NerdWallet's analysis of 2020 Home Mortgage Disclosure Act data below to learn more about debt-to-income ratio-based mortgage denials.