To calculate property age for mortgage loans, subtract the year the property was built from the current year. Lenders typically use the property’s construction year, not the purchase date, to determine its age. This calculation helps assess depreciation, loan terms, and risk. For example, a home built in 2010 and purchased in 2020 would be 10 years old. Lenders often set stricter guidelines for older properties, such as higher down payments or shorter loan terms.

Property age impacts mortgage underwriting because older homes may require more maintenance, reducing their value over time. The Federal Housing Finance Agency (FHFA) reports that properties over 50 years old depreciate at an average rate of 1.5% annually, compared to 0.8% for newer homes. This depreciation affects loan-to-value (LTV) ratios, which lenders use to approve mortgages. For instance, a 30-year-old home with a market value of $300,000 might have an adjusted value of $270,000 after accounting for depreciation, reducing the LTV from 80% to 72% if the purchase price is $240,000. The Mortgage Bankers Association (MBA) notes that loans for properties aged 30+ years require an average 0.5% higher interest rate due to increased risk. Additionally, older homes may lack modern safety features, raising insurance costs. Data from the U.S. Census Bureau (2023) shows that 21% of U.S. housing stock is over 40 years old, highlighting the need for precise age calculations to ensure accurate lending decisions. Thus, lenders rely on construction dates to evaluate risk, set appropriate terms, and comply with regulatory standards.