6 Tips for First-Time Homebuyers Entering the Market Closer to Retirement Age

Worried mature Couple in Meeting With Advisor at home.
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Americans are waiting longer to buy their first homes.

According to a report from the National Association of Realtors (NAR), the typical first-time homebuyer in 2022 was 36 years old, up from 33 just one year earlier. That’s an all-time high — and a baby boomer buying bonanza is part of the reason for that trend.

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The NAR reports that boomers overtook millennials as the largest share of homebuyers between July 2021 and June 2022 for the first time since 2012, with boomers accounting for 39% of all homes purchased during that time compared to 29% the year before. During that same period, 9% of all first-time homebuyers were baby boomers.

Making the leap from renting to owning is always stressful, expensive and full of surprises — but the stakes are higher and the considerations are different when you do it as a senior. Here are some tips to help baby boomers and late Gen Xers who are saying goodbye to their landlords for the first time when they’re in or approaching retirement.

Prepare for Leery Lenders — and Find One Who Specializes in Senior Loans

Older buyers might have more money saved, greater financial stability and a better understanding of money and real estate than their greener juniors. However, lenders are still often wary of working with them because of their limited time and capacity for earning — especially for a long-term loan like a mortgage, which typically spans 15 to 30 years. 

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“Older homebuyers may face difficulties obtaining a mortgage due to factors such as retirement or a fixed income,” said Seth Williams, real estate broker and owner of Reference Real Estate. “It’s advisable to consult with lenders who specialize in working with seniors to explore suitable mortgage options and address any eligibility concerns. Engaging the services of a knowledgeable real estate agent, financial advisor, or mortgage broker with expertise in senior homebuying can be immensely beneficial. They can provide guidance specific to older buyers’ unique needs and circumstances.”

Research Special Programs for Older Buyers

There are several programs that make it easier for first-time homebuyers to ditch their leases and get into a house. Older buyers should take advantage of any that are available to them — but they should also research programs created specifically for their age group.

“They may be eligible for special programs that are designed to help older buyers, such as the Home Equity Conversion Mortgage (HECM),” said Gagan Saini, CEO of JiT Home Buyers.

Other possible options include:

  • American Dream Downpayment Initiative
  • Neighborhood Stabilization Program
  • Self-Help Opportunity Program (SHOP) grants

Consider Asset-Based Loans

Some loans are structured specifically for older homebuyers with minimal income but significant retirement savings or other assets. They include:

  • Asset-depletion loans: Meant for buyers who don’t have a steady income, this kind of mortgage is a good fit for retired people because borrowers can qualify based solely on their liquid assets, including checking, savings and money market accounts, CDs, 401(k)s, IRAs, annuities, stocks, bonds and mutual funds.
  • Fannie Mae senior homebuying program: Fannie Mae has special rules that allow lenders to consider qualifying retirement assets as income, provided the borrower can demonstrate that the assets will continue to generate income for at least three years.
  • Freddie Mac senior homebuying program: Freddie Mac has similar provisions in its lending guidelines that allow older borrowers with limited incomes but substantial assets to qualify for mortgage loans.
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Prepare for the Expenses and Rigors of Homeownership

Rent payments include the costs and work involved in maintaining a property. Older first-time buyers who have rented their whole lives could be in for some unpleasant surprises when they finally get into a home, only to find that upkeep can be exhausting and costly.

For example, most experts suggest setting aside 1%-2% of the purchase price for maintenance every year — and much of that maintenance can be physically taxing.

“Older first-time homebuyers will have to get used to the activities and expense of home maintenance if they have been lifelong tenants,” said Bridget Blonde, a realtor with Nest Realty. “They may not have experience or even realize that a house needs to be taken care of year-round to maintain its function. They also may not have had to budget time and energy in the past to do physical exterior work like cutting the grass and shoveling the snow if their landlord always provided these services.”

Prioritize Location and Accessibility

Mobility and health can diminish with age, so it’s crucial for older buyers to assess the property in terms of their current and future accessibility requirements.

“Consider the long-term suitability of the chosen property,” said Williams. “Will it accommodate future changes in mobility or provide the desired lifestyle during retirement? Evaluating these factors can help ensure a comfortable living environment in the future.”

Similarly, location is always a key influencer in real estate purchasing decisions, but it’s especially important for older buyers.

“Consider factors like proximity to healthcare facilities, social support networks and amenities that are important for maintaining an active and fulfilling lifestyle in the later years,” said Williams.

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Pick a Senior-Friendly Home and Community

Depending on your age, you might consider a property that can accommodate any limitations or special needs you currently have or are likely to experience in the future.

“Older buyers might want to consider choosing a smaller, more manageable property or exploring alternative housing options such as condominiums, townhouses, or active adult communities,” said Peter Evering of Utopia Management Inc. in San Diego, California. “These alternatives often offer amenities and features that cater to the needs of seniors, such as single-level living, accessibility modifications, and community activities.”

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