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The Best Loans Available For Senior Citizens

Updated on August 21, 2012


As people move into the "sunset" of their life, it's important to know that if the need arises, you still have viable options when it comes to borrowing money.

Especially in a bad economy, the future can look very frightening. Huge investment losses or rising debt can make the future look bleak for seniors.

There are ways that you can get money, however, if you need it and here are some of the potential places to obtain loans for seniors.

Let's find the best loans available for senior citizens.

public domain photo
public domain photo

Loan Types Available for Senior Citizens


If you happen to be wanting to return to school, there are many loans available for seniors that will do the job. There is no age restriction on a federally secured loan, called a Stafford loan. There are actually 2 types of Stafford loans....subsidized and unsubsidized.

Subsidized loans don't accrue any interest as long as a student is enrolled at least part-time. It's a loan based on financial need. An unsubsidized Stafford loan is not based on financial need and interest will begin accruing as soon as the loan is given.

There are no age restrictions or even credit checks for either kind of Stafford loan. Both types come with a low fixed interest rate. No matter what your age, you can apply for a Stafford loan with a Free Application for Federal Student Aid form - the FAFSA.

Private loans or loans from alternative sources are also available. These are not federally guaranteed and you will most often pay higher interest rates than for the Stafford loans. Usually you also have to start paying them back upon issuance from the lender.


These have become very popular though they have also generated a lot of argument pro and con. Reverse mortgaging means that you are basically flipping your mortgage payment by tapping into the equity of the home. The equity in the home is actually being paid back to the owner and is generally done in monthly payments though can be paid back in a lump sum or once a year, etc.

Reasons to use reverse mortgages:

  • Paying off an existing mortgage
  • Supplementing retirement income
  • Needing money for home improvements
  • Paying bills
  • Healthcare expenses

The kinds of reverse mortgages also vary. Something called a single purpose reverse mortgage is available from government agencies both at the state and local level. Some are also available from nonprofit organizations. This kind of reverse mortgage varies from state to state and in fact and some states don't even have them.

There are also reverse mortgages guaranteed by the Department of Housing and Urban Development called Home Equity Conversion Mortgages (HECMs).

Lastly, there are private reverse mortgage loans called proprietary reverse mortgages.

Reasons people are applying for reverse mortgages are usually varied but most commonly, it's a way for a homeowner to live in their house and not have to pay their mortgage for as long as they live in the home. Most often, money that goes back to the homeowner as payment is not taxable.

Criticism of reverse mortgages has centered around the high costs in terms of securing the loan or closing costs. Also the fact that the longer a senior has the home on one of these mortgages, the more the home equity is depleted.

But, in contrast, the senior with a reverse mortgage can never owe more than the home is worth and they cannot pass on any debt from the reverse mortgage to their heirs. (One of the reasons that these are not popular is because children or heirs get a little ticked that nothing will be left for them - I say enjoy it while you're here and forget about the heirs!)


These are short term loans that are not secured and most often are made on a current day basis. Some seniors use payday loans when they find themselves short on cash or in between retirement checks. They generally have large fees associated with them and you're paying for the convenience of ready cash. We always pay for convenience!


When the unexpected happens such as a natural disaster or a broken water pipe there are loans available that are secured loans. The agreement is usually that the property itself is the collateral for the loan. There are also home improvement loans available by individual states, counties and cities. Most are deferred low interest loans and cover emergency repair types of situations. However, there are also some loans available for such things as revamping a home for wheelchair access that's suddenly needed.

About the Risks of Reverse Mortgages

Finding the Best Loans Available for Senior Citizens

As you can see, there are several options available to the senior community in terms of loans.

If you find that you are in need of a short term or a long term loan, check out some of these ideas but no matter what loan you're applying for, make sure you negotiate for the lowest monthly payment and the lowest interest rate with the least amount of penalties for borrowing should something arise where you can't pay it back on time.

Also don't be afraid to shop around for a better interest rate. Even if you find one, you can always approach your current lender with the lower rate and surprisingly, they'll usually match it!

In the economic climate we are faced with today, lenders are more willing to offer more options so that people can qualify for loans so if one institution doesn't meet your criteria, keep shopping for the right loan.


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    • profile image

      Loan Advice 4 years ago

      Senior Citizens need to be extra careful when looking into loan options and really do their research. Scammers often target seniors, and there is a rising amount of fraud and scams going on right now in the mortgage industry, in particular.

      One trick is someone phoning you with a refinance offer and a better interest rate than you currently have. They want payment upfront, but you never get your lower interest rate.

      You should always check with your current lender first if you are looking for a better rate or a new loan.

    • akirchner profile image

      Audrey Kirchner 5 years ago from Washington

      Monica - isn't that kinda funny really? I think I might try it~

    • monicamelendez profile image

      monicamelendez 5 years ago from Salt Lake City

      I had no idea that you could get Stafford loans as a senior. That's so awesome!

    • akirchner profile image

      Audrey Kirchner 7 years ago from Washington

      Thanks, Hanna as always for the read!

    • Hello, hello, profile image

      Hello, hello, 7 years ago from London, UK

      Very well explained and laid out, Audrey. You have done a very helpful hub.

    • akirchner profile image

      Audrey Kirchner 7 years ago from Washington

      Thanks, Simone - I was researching this for my mom...mostly....myself too I suppose for down the road! Not as far as I'd like either!

    • Simone Smith profile image

      Simone Haruko Smith 7 years ago from San Francisco

      What a useful guide for an important audience! I'm so glad you've created this overview, akirchner, and bet a lot of people shall find it very useful!

    • akirchner profile image

      Audrey Kirchner 7 years ago from Washington

      That's really sad to hear - there are so many things against reverse mortgages but then on the other hand, I do think it's a viable alternative for folks who haven't got a lot of options! Thanks so much for stopping by TM!

    • travel_man1971 profile image

      Ireno Alcala 7 years ago from Bicol, Philippines

      Great hub for senior citizens. Why can't they implement reverse mortgage loan here in the Philippines? The elderly people are often ignored to death here in my country; unless taken care of by their immediate families. Thanks, Ms. A.