Can a Social Security Recipient Refinance a Mortgage?

In order to qualify for a mortgage, be it a refinance or a purchase transaction, the mortgage holder must have enough income to cover the monthly payments and all other debt. This applies to everyone, even Social Security recipients.

Income Documentation

In most cases, the mortgage holder's bank or lending institution will require some form of income documentation to complete the mortgage refinance. This is usually a paycheck from a job or a W-2 form for income tax purposes. Social Security recipients will use the initial award letter they received when they applied for benefits. Any raises in their monthly income are also noted with additional letters. A Social Security recipient proves his income with this letter and can also use bank statements with identical monthly deposits from the Social Security Administration as additional proof of income.

Debt to Income Ratio

One of the biggest factors in a mortgage refinance approval process, in the eyes of the lender, is the debt to income ratio. This ratio compares the amount of monthly debt payments to the total income of the borrower. Therefore, the lower the outstanding debt payments in relation to the total monthly income of the borrower, including Social Security, the higher the likelihood of mortgage refinance approval.


Many retired individuals worry that their age may play a role in the lender's approval or denial of a mortgage or a mortgage refinance. However, by federal law, the lender cannot deny a borrower's loan upon the basis of age, sex, religious belief, creed or color. This is one of the major tenets of the Fair Lending Act.

Credit Score

A borrower's credit score has a major impact on the overall refinancing process. A low score can yield, at best, a higher mortgage rate and, at worst, a denial. A high score helps to yield an approval and the most favorable rates for the borrower. It is in the borrower's best interest to check her credit score a few months prior to the refinancing process to check for errors and have them removed before the process begins.