A reverse mortgage lets eligible homeowners convert part of their home equity into loan proceeds without making scheduled monthly principal-and-interest payments while they meet the loan’s ongoing requirements. The most common type is the FHA-insured Home Equity Conversion Mortgage (HECM), which is available to qualifying homeowners age 62 and older. The loan balance generally grows over time and is repaid when a maturity event occurs, such as the home being sold or the last borrower permanently leaving it.
A reverse mortgage may suit an older homeowner who wants to use home equity to support expenses, increase financial flexibility, or supplement other resources while continuing to live in the home. It is not a fit for every homeowner: the loan reduces the equity available later, and borrowers remain responsible for property-related costs and upkeep.
For a HECM, the youngest borrower generally must be at least 62. Borrowers typically need to live in the home as their principal residence, have sufficient equity to meet program requirements, and complete counseling with a HUD-approved reverse mortgage counselor. Eligible homes may include certain single-family homes, approved condominiums, and some multi-unit properties, subject to program requirements.
Eligibility also depends on a financial assessment that considers whether borrowers can keep up with property taxes, homeowners insurance, and other required housing costs. Existing mortgage debt generally must be paid off when the reverse mortgage closes, often using proceeds from the new loan. If the available proceeds are not enough to cover required payoffs and costs, the borrower may need another source of funds. Qualification and loan approval are subject to applicable credit and financial assessment, underwriting, and program guidelines.
Some married homeowners may have a spouse who is not named as a borrower. Special rules may offer protections to an eligible non-borrowing spouse, but conditions apply and the spouse may not have the same rights as a borrower. We can explain how the rules may apply to a particular household.
Reverse mortgages have costs that can include an origination charge, appraisal and other closing costs, servicing charges, and mortgage insurance premiums for a HECM. HECMs generally have an upfront mortgage insurance premium and an ongoing premium. Some costs may be financed into the loan, which means they add to the balance rather than being paid out of pocket at closing. The total cost depends on the loan, property, and terms offered.
HECMs are subject to a federal lending limit that can change over time. The amount available is not simply a percentage of the home’s value: the age of the youngest borrower, interest rates, eligible home value, existing liens, and other program factors can affect the calculation. Proprietary reverse mortgages are not HECMs and may have different eligibility rules, costs, and limits. Product availability and terms vary.
Interest and applicable fees are added to the loan balance over time, along with any proceeds advanced to the borrower. Because the balance may grow, the equity remaining in the home may decline. The loan generally becomes due when the home is sold, the last borrower dies, or the last borrower no longer lives in the home as a principal residence for the period set by the loan terms. The borrower or heirs may be able to repay the balance and keep the home, sell the home to repay the loan, or consider other options allowed by the loan and program rules.
HECM loans are generally non-recourse: when the loan is due, the borrower or heirs typically do not have to pay more than the home’s value under the program’s rules, even if the balance is higher. FHA mortgage insurance supports this feature. Borrowers must still meet their loan obligations for the applicable protections to apply. We can review the terms of a specific loan and explain what repayment could involve.
Start by telling us what you hope a reverse mortgage could help you accomplish and asking for an explanation of the available options. We can discuss the difference between a HECM and other reverse mortgage products, outline the application and counseling steps, and help you identify questions to raise with a counselor or financial professional. Before making a decision, review the written loan terms, total costs, repayment conditions, and how the loan could affect your household over time. Any application, qualification, and approval remain subject to applicable review and program guidelines.