Are you living on Social Security benefits and wondering if homeownership is still possible for you? Good news – the dream of owning your own home doesn’t have to end just because you’re relying on Social Security income!
It seems like everywhere we look, people are buying homes later in life – even well into retirement If you’re receiving Social Security benefits and feel ready to purchase a home, I’ve got the information you need to make it happen
Yes, You Can Buy a House with Social Security Income!
In a word, yes. You can buy a house even if your only source of income is Social Security. Some people may find it harder to qualify than people with regular job income, but it is definitely possible with the right planning and approach.
Federal law actually protects you from discrimination. The Equal Credit Opportunity Act prohibits lenders from discriminating against borrowers based on:
- Age
- Race
- Religion
- Nation of origin
- Receipt of public assistance (including Social Security)
There is no way for lenders to turn you down just because you are a senior citizen or get Social Security benefits. You’ll still need to meet the usual financial requirements to get a mortgage, though.
How Mortgage Lenders View Social Security Income
When you apply for a mortgage, lenders consider several sources of income. Fortunately, Social Security benefits – including Supplemental Security Income (SSI) and Social Security Disability Insurance (SSDI) – qualify as acceptable income for mortgage qualification.
Lenders evaluate your gross Social Security benefit (the amount before taxes and deductions) because they use gross income to determine loan eligibility. This differs from net income, which is what’s left after taxes.
You’ll need to send a letter from the Social Security Administration (SSA) with your mortgage application to prove that you get Social Security benefits. You can get this letter of verification online by making an account on the SSA website.
The “Grossing Up” Advantage for Social Security Recipients
Here’s where things get interesting! While getting approved for a mortgage with only Social Security income might seem difficult, there’s actually a special consideration that could help you.
While considering a standard mortgage application, lenders can increase the amount of your nontaxable income that they consider by up to 25%. This includes some or all of your Social Security benefits. That is, they may treat your income as if it were worth more than the sum of money you get.
For example, if you collect $20,000 per year in Social Security and have no other income, your lender might gross up that amount to $25,000 for a conventional loan, helping you qualify for a larger mortgage.
The amount of your Social Security benefits that are subject to tax depends on your combined income and filing status:
- Individuals with combined income under $25,000: No federal income tax on benefits
- Individuals with combined income between $25,000-$34,000: Up to 50% of benefits taxed
- Individuals with combined income above $34,000: Up to 85% of benefits taxed
- Couples filing jointly with combined income between $32,000-$44,000: Up to 50% of benefits taxed
- Couples filing jointly with combined income above $44,000: Up to 85% of benefits taxed
This means that between 15% and 100% of every beneficiary’s Social Security benefits are nontaxable and potentially eligible for grossing up during the mortgage process.
Key Requirements for Getting a Mortgage with Social Security
Getting a mortgage with Social Security income follows the same basic process as a standard mortgage application. You’ll need:
1. Good Credit Score
Most lenders require a minimum credit score of 620, though some may demand higher. With Social Security as your only income source, a higher credit score becomes even more important for strengthening your application.
2. Manageable Debt-to-Income Ratio
Lenders typically require a debt-to-income ratio (DTI) of 43% or less. This means no more than 43% of your gross monthly income should go toward your mortgage payment and other debts.
With Social Security as your only income source, it’s especially important to minimize or eliminate other debts before applying for a mortgage.
3. Down Payment
While you can get some loans with as little as 3.5% down (like FHA loans), having a larger down payment can significantly improve your chances of approval when Social Security is your only income. A bigger down payment reduces your loan amount and lowers your monthly payments, making your DTI ratio more favorable.
4. Proof of Income
You’ll need to provide that benefits verification letter from the Social Security Administration as proof of your income. If you’re combining Social Security with other income sources, you’ll need documentation for those as well.
A Real-Life Example: What You Might Afford
Let’s say you and your spouse each collect the average monthly Social Security check for a retired worker, which was around $1,980 in February 2025. With no other income sources, your annual household income would be $47,520 ($3,960 monthly).
If we assume you have no other debt, an excellent credit score, and $50,000 saved for a down payment, what could you afford?
Lenders typically cap your DTI at 43%, meaning your monthly mortgage payment couldn’t exceed $1,703 ($3,960 × 0.43). The final loan amount would depend on current interest rates and your specific lender.
As you can see, having only Social Security income will limit your borrowing power. You may need a larger down payment to buy the home you want under these circumstances.
Types of Home Loans Available for Seniors on Social Security
Seniors have several loan options to consider:
- Conventional loans: Standard mortgages that conform to guidelines set by Fannie Mae and Freddie Mac
- FHA loans: Government-backed loans with more flexible credit requirements and down payments as low as 3.5%
- VA loans: For veterans and eligible spouses, offering favorable terms with no down payment required
- USDA loans: For rural properties, sometimes available with no down payment
- Reverse mortgages: For homeowners 62+ who have substantial home equity
Tips to Strengthen Your Mortgage Application
To increase your chances of approval:
- Boost your credit score before applying by paying bills on time and reducing credit card balances
- Minimize or eliminate other debts to improve your debt-to-income ratio
- Save for a larger down payment to reduce the loan amount needed
- Consider additional income sources if possible, such as part-time work, investment income, or retirement account withdrawals
- Shop around with different lenders, as some may be more accommodating to Social Security recipients than others
- Look into government-backed loans like FHA loans, which may have more flexible requirements
Frequently Asked Questions
Can a 65-year-old get a 30-year mortgage?
Absolutely! The Equal Credit Opportunity Act’s protections extend to your mortgage term. Mortgage lenders cannot deny you a specific loan term based on your age.
Can you get a second mortgage if your only income is Social Security?
It’s challenging but not impossible. If you can qualify for the additional debt within the program guidelines, this can be accomplished, though it will be more difficult than getting a first mortgage.
Can you get a personal loan while on Social Security?
Yes, you can take out a personal loan while receiving Social Security benefits. The loan proceeds will not affect Social Security retirement benefits. However, if you’re receiving Supplemental Security Income (SSI), any loan proceeds you don’t spend could count against you and reduce your benefits.
Can you borrow money from your Social Security?
No, you cannot borrow directly from your Social Security benefits. The program does not offer loans or allow you to withdraw future benefits early, even for home purchases.
The Bottom Line
Buying a home with Social Security income as your primary or only source of income requires careful planning and preparation, but it’s definitely possible. By understanding the requirements, building your credit, minimizing debt, and exploring different loan options, you can improve your chances of achieving homeownership.
Remember that while the process may require more effort compared to traditional income sources, with the right approach, you can secure a mortgage and enjoy the benefits of owning your own home during retirement.
Have you successfully purchased a home using Social Security benefits? We’d love to hear about your experience in the comments below!
