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41% of Homeowners Ages 65 to 79 Still Have a Mortgage. Here’s the Math on Paying It Off vs. Keeping It

The mortgage-burning party is getting rarer. Harvard researchers found 41% of homeowners ages 65–79 still carry a mortgage. Here's how to think about yours.

By · Updated · 4 min read

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The old picture of retirement included a paid-off house. That picture is fading. Harvard’s Joint Center for Housing Studies found that 41% of homeowners ages 65 to 79 had a mortgage in 2022, up from 24% in 1989. Among owners 80 and older, it jumped from 3% to 31%.

So if you’re heading into retirement with a house payment, you’re far from alone. The real question is whether to pay it off or keep it. The math depends mostly on one number: your interest rate.

Quick answers

  • 41% of homeowners 65–79 carried a mortgage in 2022 (vs. 24% in 1989), per Harvard JCHS.
  • Their median mortgage debt rose from about $21,000 to $110,000 over the same period.
  • On a $110,000 balance with 10 years left, a 3.5% loan costs about $20,500 more in interest. A 6.5% loan costs about $39,900.
  • Paying extra or paying off early “earns” you exactly your mortgage rate, risk-free. Whether that beats other uses of your cash depends on your rate, savings and safety cushion.

Why more older homeowners carry mortgages

JCHS’s Housing America’s Older Adults research points to a few reasons: people bought later in life, refinanced and took cash out, or borrowed against their homes to cover living costs and care. The center has also found that older owners with mortgages are much more likely to be housing cost-burdened, meaning they spend more than 30% of income on housing.

On a fixed income, a house payment takes up a bigger slice of the budget than it did during working years. That’s why this decision deserves real numbers, not just a feeling.

We ran the numbers: a $110,000 mortgage with 10 years left

We used the JCHS median balance of $110,000 and assumed 10 years left on the loan. Here’s what’s still ahead at two common rates.

3.5% loan (refinanced 2020–21) 6.5% loan (taken in 2023–26)
Monthly principal & interest $1,088 $1,249
Interest left to pay $20,529 $39,883
Add $200/month extra: payoff time ~8.2 years ~8.2 years
Interest saved with $200 extra ~$3,834 ~$7,809
“Return” on every extra dollar 3.5%, guaranteed 6.5%, guaranteed

Principal and interest only. Taxes and insurance continue after payoff.

ExamplePat has a $110,000 balance at 6.5% and $160,000 in savings. Paying the loan off in full would erase $1,249 a month from the budget and avoid about $39,900 in interest. But it would leave only $50,000 in savings, which may be too thin for a roof, a car or a health surprise. A middle option: pay $200–$500 extra a month and keep the cushion.

The case for paying it off

  • Lower monthly bills on a fixed income. Less money has to come out of savings each month.
  • A guaranteed return. Every dollar of principal you pay off saves interest at your loan rate, with no market risk.
  • Peace of mind. For many people, owning the home outright simply feels safer.

The case for keeping it

  • Cash is flexible; home equity isn’t. Money in the bank can pay for anything. Money in your walls is hard to reach without a loan or a sale.
  • A low rate is cheap money. If your loan is at 3% or 3.5%, safe savings may pay a similar or higher rate. Check today’s yields before you decide.
  • Taxes on withdrawals. Pulling a big lump sum from a pre-tax retirement account to pay off a house can push you into a higher tax bracket for that year. A tax professional can help you check this.
Myth buster“Once the mortgage is gone, the house is free.” Not quite. Property taxes, homeowners insurance and repairs never end. Budget for them even after the last payment.

What this means for you

FAQ

How many retirees still have a mortgage?

Harvard JCHS found 41% of homeowners ages 65–79 and 31% of those 80 and older had a mortgage on their home in 2022.

Should I use retirement savings to pay off my mortgage?

It can make sense for some people, but large withdrawals from pre-tax accounts can raise your tax bill and shrink your safety cushion. Run the numbers, and consider talking with a fee-only planner or tax pro first.

Is it better to pay extra each month or pay off in one go?

Both save interest at your loan rate. Monthly extra payments keep more cash available for emergencies. A lump sum saves a bit more interest but ties up money.

Can I lower my payment instead of paying off?

If you make a large lump-sum payment, some servicers offer a mortgage recast that re-spreads the remaining balance and lowers the monthly payment, usually for a small fee.

Sources: Harvard Joint Center for Housing Studies, Housing America’s Older Adults 2023; Keys & Coffee calculations. This article is general education, not financial or tax advice. Keys & Coffee is not a lender.

Shivam Kaushik (IMSHIVA)

Written by

Shivam Kaushik· IMSHIVA

Founder & Director, QuibbleTech Solutions Pvt Ltd · Editor, Keys & Coffee

Shivam Kaushik is the founder of QuibbleTech Solutions Pvt Ltd and the editor of Keys & Coffee. He is not a licensed loan officer or financial adviser. Every guide here is written in plain English and checked against official sources such as the CFPB, HUD, Fannie Mae, Freddie Mac and the Federal Reserve. For advice on your own loan, talk to a licensed lender.

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Keys & Coffee is an independent education site. We are not a lender or mortgage broker, we do not take loan applications or payments, and nothing here is financial advice. This site is not affiliated with Axia Home Loans, Axia Financial, LLC, or Planet Home Lending. Rates and rules change often — always confirm details with a licensed loan officer and check any lender on the NMLS Consumer Access site.

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