Can retirees buy a new home before selling, without taking retirement distributions?
Yes. In this case study, a recently retired Pasadena couple wasn't yet drawing pensions, Social Security or retirement distributions. We pre-approved them on their assets alone using a 60-month assets-as-income calculation, and they bought a $2.7M single-level home with 50% down before selling their current home. The loan has no prepayment penalty, so they can pay the balance down significantly once their old home sells.
Best for: Recent retirees and downsizers with significant savings who want to buy their next home before selling
He had just retired after more than 30 years as a contractor in the aerospace industry, and they were ready for their next chapter. After raising their kids in a two-story home in Pasadena, our new clients wanted to downsize, and they found the perfect place: a single-level mid-century modern home close to Annandale Canyon Park. Straight out of Dwell Magazine, it was recently renovated, turn-key, and exactly what they wanted. There was just one worry. Their pensions, Social Security and retirement distributions hadn't started yet, and they were concerned they wouldn't qualify until they did.
The Problem: Retired, but Income Hasn't Started Yet
Recent retirees often fall into a gap. Their paycheck has stopped, but pensions, Social Security and retirement distributions haven't begun, so on paper there's little or no income to qualify with. Starting distributions early just to qualify can mean paying tax on money they don't need yet. And because they still owned their Pasadena home, they also needed a way to buy the new home before the old one sold.
The Solution: Pre-Approved on Assets Alone
We pre-approved them based on their assets alone, using our **60-month assets-as-income calculation. Instead of counting a paycheck or distributions, the calculation divides eligible account balances over 60 months to create monthly qualifying income, without withdrawing the money. With their excellent credit and a 50% down payment on the $2.7M home**, we got them premier terms. See what your own accounts could support with our assets-as-income calculator.
A Bridge Solution Without a Bridge Loan
Being pre-approved on their assets let them make an offer right away. Once it was accepted, they could finalize their plans to sell their current home, knowing they'd have the new home to move into before they had to vacate the old one. And because the loan has no prepayment penalty, they're set to pay the balance down significantly once their home sells. In effect, assets as income worked as a bridge: they bought before selling and avoided taking any distributions from their retirement accounts. If you need to tap the equity in your current home for the down payment, a bridge loan is another way to buy before you sell.
The Result: A Turn-Key Home for the Next Chapter
They got the single-level, turn-key mid-century modern home they wanted, close to Annandale Canyon Park, with no rush to sell and no taxable distributions to qualify. Wins all around.
Model Your Qualifying Income
Assets as Income Calculator
Enter your savings, investments, and retirement balances once and see all three calculations side by side — the Lumen 36-month, the Lumen 60-month, and the Fannie Mae method — with your qualifying monthly and annual income for each. Toggle retirement age, loan term, and funds-to-close to watch the numbers move, and layer in any other monthly income you have.
Compare three methods
The Lumen 36-month, Lumen 60-month, and Fannie Mae employment-related-assets calculations, side by side on one screen.
See why portfolio wins
Watch why the portfolio programs out-qualify the agency calc — often by several times the monthly income.
Layer in other income
Add Social Security, pension, or part-time W-2 income on top of any of the three asset methods.
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Frequently Asked Questions
Can I qualify for a mortgage after retiring but before my pension and Social Security start?
Do I have to take retirement distributions to qualify?
Can I buy my next home before I sell my current one?
Can I pay the loan down after my old home sells?
How does the 60-month calculation work?
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Bottom Line
If you're retired, or about to be, and your savings are bigger than your income, you may be able to buy your next home on your assets alone, even before your current home sells. Run your numbers in the assets-as-income calculator, read more about asset depletion loans in California or our Los Angeles mortgage lending, then call Lumen Mortgage at 503-966-9255. Still running a business or consulting? Bank statement loans in California qualify you on your deposits instead of tax returns.
