Best Mortgage Options For Seniors of 2023

There are many factors that play a role in mortgage eligibility — but age isn’t one of them. Thanks to the Equal Credit Opportunity Act, it’s against the law to discriminate against a credit applicant because of age (unless you’re too young to sign a contract). So even if you’re retired and have no income from employment, you have mortgage options, including loans geared specifically toward seniors.

CNBC Select compared dozens of mortgage lenders based on their loan offerings, reputation, fees and more. Below is our list of the best mortgages for seniors, whether you’re looking to tap into your home equity or buy a new house. (Read more about our methodology below.)

Who’s this for? Rocket Mortgage can be an excellent choice if you’re looking to refinance. Refinancing your mortgage can help reduce your monthly expenses or shorten your loan by securing a mortgage with new terms.

Rocket Mortgage offers the option to cash out the full equity of your home — as long as you have a credit score of 620 or higher. Meanwhile, most lenders only allow homeowners to cash out 80 to 90% of their home’s equity. This can be helpful if you’re consolidating debt, looking to buy a second property or anticipate any other large expenses. The lender might also be able to help you if your goal is simply to lower your current mortgage payment.

Rocket Mortgage offers a quick online pre-approval process. Single-family homes, second homes, investment properties and condos are all eligible for refinancing.

Who’s this for? A reverse mortgage is designed to allow seniors to access the equity in their home as cash paid by the lender. With this option, you can receive the funds in a lump sum or opt for monthly payments over a term or as long as you live in the home. To qualify, you must be 62 or older, reside in the home, have substantial equity in it and have enough funds to keep paying expenses like property taxes and insurance.

American Advisors Group (AAG) is one of the largest reverse mortgage companies known for its outstanding reputation. AAG offers several types of reverse mortgages, including a lump-sum payout, a growing line of credit, a jumbo reverse mortgage, term or tenure reverse mortgages and a reverse-for-purchase mortgage which you can use to buy a new home.

If you’re not familiar with reverse mortgages, you can browse AAG’s website for useful articles and tips. The company can also send you a free information kit to get you started. Alternatively, you can get in touch with AAG by phone and speak with one of the home equity specialists.

Who’s this for? A reverse for purchase isn’t the only means for seniors to buy a new home — you may be able to qualify for a traditional mortgage as well, whether you currently own a home or not.

We recommend PNC Bank as it offers several types of mortgages, including conventional loans, FHA loans and VA loans, USDA loans and jumbo loans. Terms range from 10 to 30 years and you can choose between a fixed-rate and adjustable-rate mortgage.

You can apply in person or online if you don’t live near a PNC Bank branch. Online prequalification can take as little as half an hour if you have all the needed documentation. Like many lenders, PNC Bank requires a credit score of at least 620.

Who’s this for? Navy Federal Credit Union can be a good option for your mortgage if you or a family member have served in the Armed Forces.

Navy Federal offers VA loans that allow borrowers to pay zero down and get up to 4% of the home’s value toward closing costs. Plus, with this type of loan, you won’t have to pay private mortgage insurance (PMI). The Military Choice mortgage, another loan option the credit union offers, comes with similar guidelines plus allows sellers to pay up to 6% of the property’s value toward closing costs. Finally, the RealtyPlus program connects homebuyers with real estate agents and offers up to $9,000 in cash back.

If you submit all the required documentation, you can be preapproved instantly. If the lender needs additional information, a home loan advisor will be in touch with you in one or two business days.

For example, you may benefit from a reverse mortgage if you plan to continue living in the home and can easily keep up with your property taxes, homeowners insurance and costs of home maintenance. Failing to do so puts your home and its value at risk. Since the reverse mortgage uses your home equity as collateral, your lender may declare your loan due and require that you start making payments.

A reverse mortgage can also make sense if both you and your spouse are 62 or older. In this case, you can put both of your names on the mortgage. If one of you dies, the other can continue receiving payments without having to pay anything back until they move or pass away.

However, if there’s a possibility you might have to move out, whether due to health issues or other reasons, you might want to avoid a reverse mortgage. Loan closing costs on a reverse mortgage can run rather high, and if you move out too soon, you might not have enough time to offset them. Plus, moving will make your reverse mortgage payable, which will eat into your proceeds from selling the house.

Finally, if you’re hoping for your heirs to inherit your home, a reverse mortgage can make it problematic. If they want to keep the home, they’ll have to pay the mortgage balance to the lender. If they can’t, the lender will sell the home and will put the proceeds (if there are any) into the borrower’s estate.

Since age isn’t a factor considered in lending decisions, there are typically no special rates for seniors. The mortgage rate you’ll get will depend on regular mortgage factors, including your credit score, loan type and term, the size of your down payment and loan-to-value ratio (LTV).

For example, if you have a low mortgage interest rate, you may be better off investing the money to add a passive stream of income. On the other hand, if you have (or expect to have) limited income in retirement, eliminating mortgage payments might be a good move.

There’s no universal answer to this question, so it’s important to evaluate your specific situation. Working with a financial advisor may be beneficial to determine the best approach.

To determine which mortgage lenders are the best for seniors, CNBC Select analyzed dozens of U.S. mortgages offered by both online and brick-and-mortar banks, including large credit unions, that come with flexible loan amounts and terms to suit an array of financing needs.

When narrowing down and ranking the best mortgages, we focused on the following features:

• Types of loans offered: The most common kinds of mortgage loans include conventional loans, FHA loans and VA loans. In addition to these loans, lenders may also offer USDA loans and jumbo loans. Having more options available means the lender is able to cater to a wider range of applicant needs. We also looked for lenders that offer loan and refinancing options that could work well for seniors, such as various types of reverse mortgages and cash-out refinancing loans.

• Fees: Common fees associated with mortgage applications include origination fees, application fees, underwriting fees, processing fees and administrative fees. We evaluate these fees in addition to other features when determining the overall offer from each lender.
• Flexible minimum and maximum loan amounts/terms: Each mortgage lender provides a variety of financing options that you can customize based on your monthly budget and how long you need to pay back your loan.
• No early payoff penalties: The mortgage lenders on our list do not charge borrowers for paying off the loan early. 
• Streamlined application process: We considered whether lenders offered a convenient, fast online application process and/or an in-person procedure at local branches. 
• Customer support: Every mortgage lender on our list provides customer service available via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
• Minimum down payment: Although minimum down payment amounts depend on the type of loan a borrower applies for, we noted lenders that offer additional specialty loans that come with a lower minimum down payment amount. 

After reviewing the above features, we sorted our recommendations by best for refinancing, reverse mortgages, buying a new home and retired veterans.

Note that the rates and fee structures advertised for mortgages are subject to fluctuate in accordance with the Fed rate. However, once you accept your mortgage agreement, a fixed-rate APR will guarantee interest rate and monthly payment will remain consistent throughout the entire term of the loan, unless you choose to refinance your mortgage at a later date for a potentially lower APR. Your APR, monthly payment and loan amount depend on your credit history, creditworthiness, debt-to-income ratio and the desired loan term. To take out a mortgage, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.

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