Reverse Mortgages in 2026: How They Work, Costs, and Who They Fit

By Daniel Ramirez

Key Takeaways

  • Reverse mortgages, primarily HECMs, allow homeowners aged 62+ to convert home equity into cash without monthly mortgage payments.
  • Eligibility requires being 62+, living in the home as a primary residence, significant equity, and the ability to maintain property taxes and insurance.
  • Funds can be received as a lump sum, monthly payments, a growing line of credit, or a combination, including options for new home purchases.
  • Key costs include FHA mortgage insurance, origination fees, closing costs, and accruing interest, but the loan is non-recourse, meaning heirs aren't liable for more than the home's value.

What Is a Reverse Mortgage?

A reverse mortgage lets homeowners 62 and older turn part of their home equity into cash without a monthly mortgage payment. The loan is repaid when the last borrower sells, moves out permanently, or passes away. The most common type is the FHA-insured Home Equity Conversion Mortgage (HECM).

Who Is Eligible?

  • At least one borrower age 62 or older
  • The home is your primary residence
  • Significant equity (the home is paid off or has a low balance)
  • Ability to keep paying property taxes, insurance, and HOA dues, confirmed by a financial assessment
  • Completion of HUD-approved counseling

How You Can Receive Funds

  • Lump sum
  • Monthly payments (for a set term or for as long as you live in the home)
  • Line of credit, which can grow over time on the unused portion
  • A combination of the above

There is also HECM for Purchase, which lets seniors buy a new home using a reverse mortgage, often to downsize without taking on a monthly payment.

Costs to Understand

  • FHA mortgage insurance (upfront and annual)
  • Origination fee (capped by HUD)
  • Standard closing costs
  • Interest, which accrues and is added to the balance

Built-In Protections

  • Non-recourse: you or your heirs never owe more than the home is worth when sold.
  • Heirs keep options: they can sell the home, keep it by paying off the loan (or 95% of appraised value, whichever is less), or hand it back.
  • You keep title. The lender does not own your home.

Common Myths

  • "The bank takes my house." False. You keep ownership.
  • "My kids will inherit debt." False. The loan is non-recourse.
  • "I can't have a mortgage already." Not necessarily. Many borrowers use a reverse mortgage to pay off an existing loan.

Is It Right for You?

It can be a strong fit if you want to eliminate a mortgage payment, supplement retirement income, or create a standby line of credit. It may not fit if you plan to move soon or want to leave the home free and clear to heirs. Include your family and financial advisor in the conversation.

Learn More

Read our full reverse mortgage guide or get a quote — no SSN required.

Frequently Asked Questions

What is a reverse mortgage?

A reverse mortgage allows homeowners aged 62 or older to convert a portion of their home equity into cash. Unlike a traditional mortgage, you don't make monthly payments; the loan is repaid when you sell the home, move out permanently, or pass away. The most common type is an FHA-insured Home Equity Conversion Mortgage (HECM).

Who is eligible for a reverse mortgage?

To be eligible, at least one borrower must be 62 or older, the home must be your primary residence with significant equity, and you must demonstrate the ability to pay property taxes, insurance, and HOA dues. Completion of HUD-approved counseling is also required before closing.

Do I still own my home with a reverse mortgage?

Yes, you retain ownership and title to your home with a reverse mortgage. The lender does not own your home. You remain responsible for maintaining the property, paying property taxes, homeowners insurance, and any HOA fees, much like a traditional mortgage.