Qualifying for a VA Loan When You’re Retired


Thomas Short
Military VA Loan contributor

You’re a veteran who decided to retire. Now you can enjoy the time off and move wherever you’d like.

However, you don’t have the same type of income, and you’re worried you might not be qualified to buy a house.

Retirees are not only eligible to purchase homes, but they get some additional benefits they didn’t have when they were still employed. They might not be able to afford as large a home as before retiring, but there are still plenty of homes that are affordable for retirees.

Check your VA loan eligibility. Start here (Dec 1st, 2022)

Can you get a VA loan if you are retired?

If you are a retiree looking to pursue homeownership, it is possible to get a VA loan.

As long as you meet the military service requirements and the lender’s eligibility criteria, and can demonstrate sufficient cash flow to pay off the mortgage with regular monthly payments, retirement won’t keep you from purchasing a home with a VA loan.

Getting a VA loan as a retiree

Buying a home when you’re retired is easier when you have access to VA products. These give home buyers additional flexibility, particularly when it comes to financial matters.

To figure out if you’re eligible to purchase a home as a retiree, you’ll need to figure out your income situation and VA eligibility.

Checking your VA eligibility

If you’re retired, you don’t have to use a VA loan to buy a new home. There are plenty of products available, some of which are easier to qualify for. Still, former service members may want to stick with Department of Veterans Affairs mortgages.

VA benefits include:

  • Zero down payment
  • No private mortgage insurance
  • Competitive mortgage rates
  • Relatively flexible credit requirements

Those are significant benefits and can save borrowers thousands of dollars over the life of their loan.

Most veterans are going to be eligible for the VA mortgage loan, but it depends on how long and when they served in the armed forces. Some surviving spouses will also qualify, if they haven’t remarried.

If you’re curious about your eligibility, you can learn more about meeting the requirements for a certificate of eligibility (COE) here.

Beyond the service-related requirements, you’ll need to meet the mortgage lender’s criteria, which will include credit score and debt-to-income ratio requirements.

VA funding fee

When using a VA loan, you’ll need to pay a VA funding fee. This fee can be paid at closing or rolled into the mortgage loan, and helps the Department of Veterans Affairs offer the substantial benefits of the VA home loan program.

Check your VA loan eligibility. Start here (Dec 1st, 2022)

Determining your income

For retirees, lenders will want to know they can afford to live in the home they purchase. Savings are an excellent start, but income goes a long way in qualifying because you are signing up for a mortgage payment.

Luckily for retirees who want to become homeowners, there are several ways you can include income even though you are no longer working.

Pension/Retirement income

One of the most obvious income sources for veterans who are retired is their pension. Any other jobs that provide some type of retirement income can be included as well. Savings from your 401k or IRA that started paying out work here as well.

If you’ve started collecting, Social Security can also be included in your income.

Household income

Children moving back in with their parents is a newer trend. If someone is living under your roof and working, you can include their income in the household income. Be careful with this, though – you’ll probably need to prove that they plan on living with you for at least another few years.

Rental income

Some people own a building with multiple units, or they may be renting out a room in their home. Others may have properties elsewhere that are rented out. Any income collected through rentals is considered verifiable by the VA, so you can include it in your application.

Disability

Some veterans receive disability checks for a service-connected disability. Others suffered injuries after their service that restrict their ability to work. Disability income is a verifiable source, according to the VA.

Part-time job income

Although they might not have a full-time job anymore, many retirees choose to bring in some income through part-time work. In many cases, VA lenders will count this new job as a part of their monthly income, as long as the applicant can confirm continuity.

Other sources of income

One of the nicest parts of the VA loan is that many of its guidelines are discretionary, meaning the rules can change on a case-by-case basis. If you have a different source of income that the VA doesn’t explicitly approve, there’s still a chance that your lender will allow it.

Check your VA loan eligibility. Start here (Dec 1st, 2022)

Qualifying for a VA loan using retirement income

As long as you have a stable income that is expected to continue into the future, you shouldn’t have a problem using retirement income to qualify for a VA loan.

Before you jump into the home-buying process, take a quick look at your income streams. If you have a pension, government benefits, or rental income, those are all relatively likely to continue in the future.

Additionally, anyone pursuing a refinance, such as a VA cash-out refinance or VA Interest Rate Reduction Loan (IRRRL), should be prepared to prove their income.

If you aren’t sure whether your income counts, a loan officer can help you determine if it’s VA loan eligible.

Other requirements

Retirees who have enough money to buy a home still have to meet some of the VA’s other requirements. To be eligible for a loan, retirees should expect to:

  • Meet occupancy requirements
  • Pay closing costs
  • Have a strong enough credit score
  • Meet debt-to-income requirements

These are items all VA loan users will have to cover, not just retired veterans. So, aside from proving your income, there really isn’t much more to buying a home when you’re retired than when you’re working.

Check your VA loan eligibility. Start here (Dec 1st, 2022)

FAQs

Can you use the VA loan after you leave the military?

Yes, it’s possible to obtain a VA loan after you leave the military. You’ll need to meet the specific service requirements to be eligible for this type of loan, and most veterans will qualify. The minimum amount of active-duty service required varies based on when you served. Check the eligibility requirements here.

How many retirement points are needed for VA loan?

If you are looking to get a VA loan as a current or former member of the National Guard or Reserve, you’ll likely need at least six years’ worth of points, with each year of service equaling about 50 points.

Speak to your commanding officer to determine how many retirement points you have.

Can a retired military person still use a VA loan?

Yes, retired military persons who meet the service criteria may have the option to pursue a VA loan. But remember that you’ll need to meet other borrower criteria, such as a good credit score and steady income, for a lender to approve a VA loan.

Does the VA allow future income?

The nature of the future income determines whether or not it is allowed. For example, future income from a steady job that you’ve held for at least two years would be acceptable. But future income projections for overtime in a struggling industry might not be deemed acceptable income.

How many VA loans can you have in a lifetime?

There’s no limit to the number of VA home loans you can have in a lifetime, but you’ll need to restore your entitlement before you can get a new VA loan. There are a few ways to do this, but this will usually mean selling or refinancing the original property — or paying off the original VA loan in full.

Can a 75-year-old veteran get a VA loan?

Yes, it’s possible for a 75-year-old veteran to get a VA loan. There is no age limit attached to VA loan eligibility. However, you’ll need to meet the other borrowing requirements regardless of your age.

Check your VA loan eligibility. Start here (Dec 1st, 2022)