Loan & Mortgage Calculator

It depends on the rate and on where the payment will come from. A mortgage in retirement is a fixed monthly bill that has to be met in every market. While you work, a salary pays it. Once you stop, it is paid from Social Security, a pension, or withdrawals from savings, and each of those makes it more expensive or riskier than it looks on the statement.

Three questions settle most cases. First, is the rate above or below what safe bonds pay you after tax? A fixed 3% loan that costs less than a Treasury or CD would pay you is cheap money; a 7% loan rarely is. Second, does guaranteed income cover the payment? If Social Security and a pension pay it with room to spare, the loan adds little risk. If the portfolio pays it, every payment is a forced sale, including after a market fall. Third, how would you pay it off? Cash or bonds in a taxable account can retire the loan cheaply. Money in a traditional IRA comes out taxed as income, and a lump-sum withdrawal can push you several brackets higher and into a Medicare surcharge two years later.

Many retirees end up in the middle: they keep a low-rate loan, stop making extra payments, and hold enough in a taxable account to pay it off if they ever choose to. What rarely makes sense is paying a high rate while holding bonds that yield less.

Compare the mortgage rate with a safe after-tax yield of similar length, not with stock returns. Paying down a mortgage returns exactly its interest rate, with no risk and no tax on the saving. The honest comparison is a Treasury or CD you would otherwise hold, after federal and state tax. If the mortgage rate is higher, paying it off wins with certainty. If it is lower, keeping the loan and the bonds wins, also with certainty.

Stocks may well earn more than the mortgage rate over long periods, but borrowing against your house to own stocks is a leveraged bet, and it is the kind of bet that hurts most when markets fall early in retirement. A useful way to see it: a mortgage is a negative bond. If your plan holds 40% in bonds and cash, and you also owe a mortgage, your true bond holding is smaller than it looks. Paying off the loan from the bond side of the portfolio leaves your stock risk unchanged.

The mortgage interest deduction rarely changes the answer in retirement. A married couple both 65 or older has a $35,500 standard deduction in 2026, before the separate senior deduction of $6,000 each. On the calculator's default $260,000 loan, first-year interest is about $16,588; with $7,800 of property tax (state and local taxes are capped at $40,000), itemized deductions stay well below the standard deduction unless large charitable gifts are added. For most retirees, the after-tax cost of the loan is its full rate.

Two cautions before paying off. Keep a cash reserve of one to two years of withdrawals afterwards, since a paid-off house is hard to spend. And pay attention to the tax on the money you use: the guide to retirement withdrawal order shows which accounts to draw from, and the mortgage payoff calculator compares the two paths year by year.

Yes, and the law protects you while you do. Under the Equal Credit Opportunity Act, a lender may not refuse credit because of age, must treat applicants 62 and older at least as favorably as younger ones when age is used in a scoring system, and may not discount or exclude income because it comes from a pension, annuity or other retirement benefit (CFPB, Regulation B).

What lenders look for is income they can expect to continue. Fannie Mae, whose rules most conventional lenders follow, generally wants income that depends on an asset balance or has an end date to continue for at least three years from the loan date (Fannie Mae Selling Guide). Social Security, pensions and annuity payments usually qualify easily with award letters and statements. Regular IRA withdrawals can count too, if the account is large enough to sustain them.

Retirees with large savings but modest income can use what lenders call asset depletion. Under Fannie Mae's rules for retirement and other employment-related assets, the lender takes the eligible balance, subtracts any early-withdrawal penalty and the money used for the down payment, closing costs and required reserves, and divides the result by the loan term in months (Fannie Mae Selling Guide). With $1,200,000 left after those amounts, that is $3,333 a month of qualifying income on a 30-year loan, or $6,667 on a 15-year loan. The loan can be at most 70% of the home's value, or 80% if the owner of the assets is at least 62. Rules differ between lenders and loan programs, so ask each lender how they count assets before you apply.

The 15-year loan if the payment is comfortable; the 30-year loan if you want a low required payment and the discipline to prepay. At the calculator's defaults, the comparison for a 64-year-old borrower looks like this:

The 30-year loan costs $183,937 more in interest at the same rate, and the real gap is wider because 15-year rates are usually lower. In return, the required payment is $622 a month less. Paying the 30-year loan as if it were a 15-year one, an extra $622 a month, clears it in 15 years; you pay the higher rate but can drop back to the lower payment in a bad year, a long illness, or after the death of a spouse when household income falls.

Age at payoff matters less than it seems. The loan does not pass to your children as a personal debt; it is repaid from the estate, usually from the sale of the house, and heirs who keep the house can refinance or pay it off. What matters more is whether the payment remains affordable on one person's income, since one Social Security check stops when the first spouse dies.

Cash from the sale of the previous home is often the cheapest money you will ever have for the next one. Up to $250,000 of gain on a main home, or $500,000 for a married couple filing jointly, is excluded from income if you owned and lived in it for at least two of the five years before the sale (IRS Topic 701). Proceeds within the exclusion come to you tax-free, while the same amount drawn from an IRA would be taxed as income.

A loan makes more sense when the purchase comes before the sale and you need a bridge, when paying cash would mean selling taxable investments with large gains, or when your savings sit mostly in IRAs. In those cases a mortgage, sometimes paid off a year or two later once the old house sells or once withdrawals can be spread over several tax years, can cost less than the tax on raising the cash at once.

Budget for costs that change with the move: property tax in the new county or state (many offer senior exemptions or freezes, with rules that vary), insurance in regions where premiums are rising fast, and HOA dues in a 55-and-over community, which can cover exterior maintenance but also rise over time. The guide to downsizing in retirement covers the whole decision, including when moving does and does not free up money.

When you want to stay in your home for the rest of your life and need to turn part of its value into income or a standby line of credit. The most common type, the FHA-insured Home Equity Conversion Mortgage, is available to homeowners 62 and older. There is no monthly payment: interest and fees are added to the balance each month, and the loan is repaid when the last borrower leaves the home, usually by selling it (CFPB).

• Counseling first. HUD requires a session with an approved HECM counselor before you apply (HUD).
• A cap on the home value used. For 2026, the maximum claim amount is $1,249,125 nationwide (HUD Mortgagee Letter 2025-22). You can borrow only a share of it, which rises with the age of the youngest borrower.
• Obligations continue. You must pay property tax and insurance, keep the house in repair and live there as your main home. Falling behind can make the loan due.
• A growing balance. Borrowed money plus interest plus fees each month means the debt rises, and less equity is left for you or your heirs.
• A right to cancel. You can cancel within three business days after closing, in writing (CFPB).

A HECM can also finance a purchase, which lets a buyer 62 or older put down a large share of the price and never make a monthly payment on the rest. Costs are high compared with an ordinary mortgage, so it tends to suit people who are house-rich and cash-poor more than affluent retirees who could sell investments. Be wary of anyone who approaches you with a reverse mortgage tied to a home repair or an investment product; the guide to investment scam red flags lists the warning signs.

Because interest is charged on the balance you still owe, and the balance is largest at the start. Each month the lender takes one month of interest on the current balance; whatever is left of the fixed payment reduces principal. As the balance falls, the interest share shrinks and the principal share grows.

On the default 15-year loan, $16,588 of the first year's $27,179 of payments is interest and $10,590 is principal. On a 30-year loan of the same size, $16,814 is interest and only $2,906 goes to principal. This is why an extra payment does the most good early: every dollar of principal repaid in the first years stops interest for all the years that remain. It is also why refinancing into a fresh 30-year loan late in an old one can raise lifetime interest even at a lower rate: you restart the interest-heavy years.

• Adjustable rates. Payments are for a fixed-rate loan. For an adjustable loan, test the payment at the maximum rate the note allows.
• Rising taxes, insurance and dues. They are held flat; in practice they rise over a 15- or 30-year term.
• Mortgage insurance ending. PMI usually stops once you reach 20% to 22% equity; the calculator keeps the amount you enter.
• Taxes on the money that pays the loan. Payments funded from a traditional IRA need a larger gross withdrawal.
• Closing costs and points. Add them to the cost of a loan when comparing it with paying cash; the refinance calculator handles the break-even.