When Are You Too Old for a 30-Year Mortgage?

By: Dan Caplinger, Contributor Published on: Feb 15, 2020

It can be hard to get a long-term mortgage as you get older.

For homebuyers in their 20s or 30s, a 30-year mortgage can be the perfect way to finance their dream home. Stay in that home throughout their career, and it’ll be paid off by the time they hit their 50s or 60s — just when they’ll be thinking about retiring.

But for older people who are looking at buying a home, the natural question is whether there’s a point at which you’re too old for a 30-year mortgage. The short answer is that you’re never too old to seek a 30-year mortgage, but that doesn’t make it a good idea for every older homebuyer who needs financing to make their purchase.

It’s never about age

The reason you’re never too old to get a mortgage is that it’s illegal for lenders to discriminate on the basis of age. Under the Equal Credit Opportunity Act, age is just one of several factors that lenders can’t use to make decisions about mortgages or other loans.

However, that doesn’t mean it’ll necessarily be easy for every older borrower to get a bank to approve a mortgage loan. That’s because no matter how old or young you are, you still have to be able to prove to your lender that you have the financial means to make your mortgage payments. That’s typically a lot easier to do for someone who’s still working and earning a paycheck than it is for someone who’s retired.

Retirees will generally have to demonstrate that whatever income they get — whether it’s from Social Security, a workplace pension, income from a rental property, investment income on your retirement nest egg, or other sources — will leave them in a position to pay their mortgage and still have enough left over to cover basic living expenses.

Considerations when deciding whether to get a 30-year mortgage

In deciding whether to try to get a 30-year mortgage, you’ll want to take the following things into account:

  • Will you have enough cash flow to cover the monthly mortgage payments, both now and in the future? This is the most important question to ask yourself. If you anticipate any future changes to your total income, you don’t want to put yourself in a position where you’re suddenly no longer able to make your payments.
  • If you live in a location where property taxes go up year after year, will a higher tax liability make it harder to make mortgage payments? Even with a 30-year fixed mortgage that has you making the same monthly mortgage payments throughout the term of the loan, rising ancillary costs like taxes can turn what was once an affordable option into an unaffordable one.
  • If you’re married, what impact would the death of one spouse have on the financial condition of the other? For many retired couples, the death of a spouse causes a dramatic decline in the total amount of Social Security benefits the surviving spouse receives. Many private pensions also stop making payments at the death of the working spouse — potentially leaving the survivor without financial support.
  • Based on your situation and living plans, could a different type of mortgage be more appropriate? For instance, someone turning 50 might consider a 15-year mortgage instead of a 30-year one, with the goal of having the home paid off by age 65 — a typical age to retire.
  • Finally, what’ll happen to the home — and the mortgage — after you (and your spouse, if you’re married) pass away? If you expect your loved ones to sell the home, then you don’t necessarily have to worry as much about a mortgage. However, if you want family members to be able to stay in the home, then making separate provisions for repaying the mortgage — for instance, by using a life insurance policy — could be a smart move.

The Millionacres bottom line

Age is only one part of the decision-making process when buying a home and taking out a mortgage. If you’re nervous about your future cash flow, then you might want to avoid making a long-term financial commitment like a 30-year mortgage, because if at some point you can’t make your monthly payments, then you could lose your home. On the other hand, if you have ample financial resources to help you get through retirement securely, then getting a 30-year mortgage can be a smart way to finance a home purchase and retain the flexibility to use your retirement savings for other purposes.

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