Reverse Mortgage (HECM)
Reverse mortgages let homeowners 62+ convert home equity to cash without monthly mortgage payments. Receive funds as a lump sum, line of credit, or monthly payments—and continue living in your home. The loan is repaid when you move, sell, or pass away.
Program Details
Key Benefits
- Eliminate monthly mortgage payment
- Access tax-free cash from equity
- Growing line of credit option
- Stay in your home for life
- Non-recourse protection
Program Tags
Who It's Best For
- Homeowners age 62+ who want to access home equity
- Retirees looking to supplement fixed income
- Seniors who want to age in place without monthly mortgage payments
- Homeowners who want a financial safety net via line of credit
- Those looking to delay Social Security for higher benefits
Advantages
- No monthly mortgage payments required
- Access equity while staying in your home
- Multiple disbursement options (lump sum, line of credit, monthly)
- Line of credit grows over time
- Non-recourse—never owe more than home value
- Proceeds are generally tax-free (consult tax advisor)
- FHA-insured program protections
- Surviving spouse protections available
Considerations
- •Loan balance grows over time (accruing interest)
- •Reduces inheritance for heirs
- •Closing costs and MIP add to loan balance
- •Must maintain property taxes, insurance, and upkeep
- •Equity decreases over time
- •Complex product requiring counseling
- •Moving to assisted living for 12+ months triggers repayment
Eligibility Requirements
- Homeowner must be 62 years or older
- Home must be primary residence
- Sufficient equity in the home
- Ability to pay property taxes, insurance, and maintenance
- Complete HUD-approved counseling session
Additional Requirements
- Age 62+ for all borrowers on title
- Complete mandatory HUD counseling
- Financial assessment to verify ability to pay taxes/insurance
- Property must meet FHA standards
- Existing mortgages must be paid off (can use reverse proceeds)
- Stay current on property taxes, insurance, and HOA fees
Pro Tips
- The line of credit option grows over time—unused credit increases, providing a growing financial safety net
- Consider using reverse mortgage to delay Social Security—delaying from 62 to 70 increases benefits by ~77%
- HECM for Purchase lets you buy a new home with a reverse mortgage, reducing upfront cash needed
- Non-borrowing spouses under 62 can be protected with proper planning—discuss options carefully
- Counseling is required but valuable—use it to understand all options and implications
- You can never owe more than your home is worth (non-recourse protection)
- Compare HECMs to HELOCs and home equity loans—reverse mortgages have unique advantages for retirement
Also Known As
Helpful Resources
Instead of making monthly payments to a lender, the lender pays you. You receive equity from your home as cash while continuing to live there. The loan balance grows over time and is repaid when you sell, move, or pass away—typically from the home sale proceeds.
Yes! You retain full ownership and title to your home. You can live there as long as you want, make improvements, and leave it to heirs. The lender simply has a lien that's repaid when the home is sold.
You can choose: (1) Lump sum—all available proceeds at once, (2) Line of credit—draw funds as needed with unused credit growing over time, (3) Monthly payments—fixed amount each month, or (4) Combination of these options.
The amount depends on your age, home value, interest rates, and current mortgage balance. Generally, older borrowers and higher home values qualify for more. The 'principal limit' can range from 40-75% of home value depending on these factors.
The loan becomes due. Your heirs can pay off the loan and keep the home, sell the home and keep any equity above the loan balance, or simply walk away (non-recourse means heirs don't owe if the home sells for less than the balance).
No! HECMs are non-recourse loans. You or your heirs can never owe more than the home's value at the time of sale. If the loan balance exceeds home value, FHA insurance covers the difference—not you or your estate.
You must live in the home as your primary residence, pay property taxes and homeowner's insurance, maintain the property, and pay any HOA fees. Failure to meet these obligations can trigger default.
Non-borrowing spouses under 62 can stay in the home after the borrowing spouse passes away or moves to care facility, but they must meet certain requirements established in 2015. Discuss this carefully during counseling.
Reverse mortgages work best for seniors who plan to stay in their home long-term, need to supplement retirement income, want to eliminate monthly mortgage payments, or need a financial safety net. The mandatory counseling helps you evaluate if it's right for your situation.
HECM for Purchase lets you buy a new home using a reverse mortgage. You make a larger down payment (typically 50-60% of price) and get a reverse mortgage for the rest—no monthly payments. Great for downsizing or relocating in retirement.
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Typical Documents
- Last 30 days of pay stubs or income docs
- Last 2 years W-2s or 1099s (as applicable)
- Most recent 2 months of bank statements
- Government-issued ID
Exact items vary by program and scenario.
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Information provided is for educational purposes only and is not a commitment to lend. All loans subject to underwriting approval. Rates and terms subject to change. Equal Housing Lender. Equal Housing Opportunity.