A reverse mortgage is a home loan that lets eligible homeowners access part of their home equity without making required monthly mortgage payments to the lender while they meet the loan’s obligations. The balance generally grows over time and is typically repaid when the borrower sells the home, moves out, or dies. The most common type is the FHA-insured Home Equity Conversion Mortgage (HECM); proprietary reverse mortgages are also available, with different terms and requirements.
A reverse mortgage may be worth exploring for older homeowners who want to use home equity to support expenses, supplement other resources, or manage cash flow while remaining in their primary residence. It may also be considered by homeowners who want to pay off an existing mortgage, although doing so uses some of the available proceeds. It is not the right fit for everyone: the loan reduces home equity, has costs, and requires borrowers to keep up with property-related obligations.
For a HECM, at least one borrower generally must be 62 or older, and the home must be the borrower’s principal residence. Eligible homes typically include single-family residences, certain multifamily properties where the borrower occupies one unit, and some condominiums or manufactured homes that meet program requirements. Borrowers generally need sufficient equity to meet the program’s requirements and must complete counseling with a HUD-approved reverse mortgage counselor before obtaining a HECM.
Lenders also review financial information, including the borrower’s ability and willingness to pay property taxes, homeowners insurance, and other required property charges. Depending on that review, funds may be set aside to cover some obligations. Credit, property, and other requirements vary by product. Qualification and approval are subject to credit approval and program guidelines. Proprietary products may have different age, property, and equity requirements.
Reverse mortgage costs can include an origination fee, appraisal and other closing costs, and, for a HECM, FHA mortgage insurance premiums. HECM mortgage insurance is generally charged upfront and annually on the outstanding loan balance. It helps insure the HECM program; it does not protect the borrower from the loan’s costs or guarantee that home equity will remain. Proprietary reverse mortgages may have different fee structures and do not necessarily include FHA mortgage insurance.
Some costs may be paid from loan proceeds rather than out of pocket, but financing them reduces the funds available and adds to the balance. Interest and certain fees accrue or are added over time, so the amount owed generally increases as the loan continues. HECMs are subject to a national FHA lending limit that can change. The home’s appraised value, the applicable limit, borrower age, and other factors help determine the loan amount; a home’s value alone does not determine available proceeds.
A reverse mortgage does not remove your responsibility for property taxes, homeowners insurance, maintenance, or applicable association charges. Failing to meet these obligations or other loan terms could lead to default and, in some cases, foreclosure. Before closing, review the loan documents, costs, and timeline for when repayment may be required.
A HECM generally becomes due and payable when the last surviving borrower dies, sells the home, or no longer uses it as a principal residence, subject to program rules and protections that may apply to an eligible non-borrowing spouse. A temporary stay away from home may be treated differently from a permanent move; for example, extended residence in a healthcare facility can affect the loan. Ask the lender how the rules apply to your household and review any spouse protections before closing.
When repayment is due, the home may be sold and the proceeds used to repay the loan, or heirs may choose another permitted way to pay it off and keep the property. HECMs are generally non-recourse loans: if the balance exceeds the home’s value, neither the borrower nor heirs are typically required to pay more than the home’s value under the program’s rules. Heirs should contact the servicer promptly to learn available options and deadlines.
Start by discussing your goals, expected time in the home, existing mortgage, household budget, and plans for your equity. We can explain available reverse mortgage options, help you understand the application and property review, and outline costs and responsibilities for the product being considered. For a HECM, you must complete the required HUD-approved counseling; we can explain how to prepare for that step. Compare alternatives and involve family members or professional advisers if helpful. Any loan remains subject to credit approval and program guidelines, and the terms available depend on your circumstances and the product selected.