Does Age Affect Your Mortgage Application?

If you’re in your early 20s and applying for your first mortgage loan or a senior homebuyer looking to purchase the residence where you’ll spend your twilight years, you may be wondering if age affects a mortgage application.

Under the Equal Credit Opportunity Act, creditors can’t discriminate against you based on age, race, color, sex, religion, marital status, or national origin. However, age can indirectly impact the mortgage loan application process (check out the mortgage process explained to get familiar with the steps of securing a mortgage loan).

So if you’re still wondering, “Does age affect a mortgage application,” it can. Here’s how:

Meeting general requirements

What matters most is your ability to repay the loan for which you’re applying, no matter if you’re 21 or 81 years old. Regardless of your age, your loan officer will generally evaluate the following criteria:

• Proof of income
• Past or present employment verification
• Debt-to-income ratio
• Credit history and credit score
• Your mortgage’s loan-to-value (LTV) ratio
• Proof of current assets, such as checking, savings, and investment accounts

These factors could impact your mortgage application differently depending on your age. For example, if you’re only 21, you may not have a very lengthy employment history to consider. And if you’re 80, you may be retired and then have to prove you have another reliable source of income for making your mortgage payments.

What young home buyers should know

The first steps you should take in the home-buying process start years before you even think about purchasing a home. As soon as you’re able, start building good credit by paying your bills on time, applying for a credit card and consistently paying off your balance, and paying down or paying off any loans you have. It’s also a good idea to start saving money for your future down payment.

When you feel you are ready to purchase a home, the first and most important step is scheduling a meeting or phone call with your OVM Financial loan officer. Your loan officer can help you prepare by explaining the mortgage process and down payment requirements for different types of mortgage loans.

Affordability is one of the biggest obstacles you may encounter as a young adult trying to purchase a home; however, your initial meeting with your loan officer will allow you to examine your options and plan a budget. It will also give you the opportunity to ask any questions. Our OVM Financial loan officers are happy to explain anything you don’t understand.

Home-buying tips for seniors

If you’re retired and planning to purchase a home or refinance your current one, your loan officer will likely examine your financial situation with the same scrutiny they would a young adult. While a younger person is likely providing proof of income from a job, your income will probably come from retirement accounts, social security benefits, long-term disability, annuities, or pensions.

If you have ample cash reserves, your lender may also approve you for a loan based on your liquid assets rather than current income sources.

If you draw social security, your loan officer may be able to “gross up” your earnings since social security is typically non-taxable. This means they can increase the qualifying amount by 10% to 25% to help you secure a larger monthly mortgage payment.

If you choose to use your social security income to pay your mortgage, you may need to provide documentation, such as a Social Security Administration Award letter, proof of current receipt, and proof of future income for at least three years, to your loan officer.

So does age affect a mortgage application? It can, but it certainly won’t disqualify you for a loan. If you’re interested in applying for a home loan, contact an OVM Financial expert. You can also find more information on our blog, including articles about how long it takes to get a loan approved and do all mortgage applications go to underwriters.