Reverse Mortgages

Reverse mortgages are for homeowners 62 and older who have substantial equity in the home they live in. Some proprietary programs are available to borrowers as young as 55 in certain states.

They tend to make the most sense for homeowners who intend to stay in the home for the long term and who want to improve their financial flexibility in retirement. Common reasons borrowers use one include eliminating an existing mortgage payment to free up monthly cash flow, supplementing retirement income, establishing a standby line of credit for future needs, covering healthcare or in-home care costs, funding home modifications for aging in place, or delaying Social Security to a higher benefit age.

There’s also a HECM for Purchase option, which lets you buy a different home — downsizing, moving closer to family, or relocating to a single-story property — using a reverse mortgage combined with a down payment, without taking on a monthly mortgage payment on the new home.

A reverse mortgage is usually not the right fit if you’re likely to move within a few years, since the upfront costs are significant and are spread over a short period. It also warrants careful thought if leaving the home to heirs debt-free is a high priority, or if you’re already struggling to keep up with property taxes and insurance. We’ll tell you plainly if we think it isn’t right for you.

• No monthly mortgage payment is required — the loan is repaid when the last borrower sells, permanently moves out, or passes away.
• You keep ownership and stay on title, with the lender holding a lien in the same way as any mortgage.
• Choose how you receive funds — a lump sum, fixed monthly payments for life, monthly payments for a set term, a line of credit, or a combination.
• The unused line of credit grows over time on HECM loans, increasing the amount available to you in later years.
• Any existing mortgage must be paid off using the proceeds, which is often the main benefit for borrowers still carrying a payment.
• The amount you can access depends on the age of the youngest borrower, current interest rates, and the lesser of your home’s appraised value or the FHA lending limit.
• The loan balance rises and your equity falls over time as interest and insurance premiums accrue.
• The loan is non-recourse — you or your heirs will never owe more than the home’s value at the time of sale.
• You can repay at any time without a prepayment penalty.

• Youngest borrower must be at least 62 for a HECM; some proprietary programs start at 55 depending on the state.
• The home must be your primary residence — eligible property types include single-family homes, two- to four-unit properties where you occupy one unit, HUD-approved condominiums, and many manufactured homes.
• Significant equity in the home — there’s no fixed percentage, but the required equity increases the younger you are.
• HUD-approved counseling is required before you can apply. This independent session exists to make sure you understand the product, and we’ll help you arrange it.
• A financial assessment of your income, assets, and credit history, confirming you can sustain property taxes, homeowners insurance, and upkeep. If there’s concern, a portion of the proceeds may be set aside to cover those costs.
• No delinquent federal debt, and any existing mortgage must be paid off at closing.
• Ongoing obligations: you must continue to pay property taxes, homeowners insurance, and any HOA dues, keep the home in good repair, and live in it as your primary residence. Failing to meet these obligations can cause the loan to become due and could result in foreclosure.