Reverse Mortgage Loans

Turn home equity into income without a monthly mortgage payment

What is a reverse mortgage loan?

A reverse mortgage lets homeowners aged 62 and older convert part of their home equity into cash while continuing to live in the home. The most common type is the FHA-insured Home Equity Conversion Mortgage (HECM). Instead of you paying the lender each month, the loan balance grows over time and is repaid when the last borrower sells, moves out permanently, or passes away. You keep title to your home throughout.

Ideal for: Homeowners 62 and older with substantial equity who want to supplement retirement income, eliminate an existing mortgage payment, cover healthcare costs, or hold a standby line of credit.

Key Benefits

  • No monthly principal and interest payment required
  • You keep title to and live in your home
  • Proceeds are generally not taxable income
  • Line-of-credit growth feature on adjustable HECMs
  • Non-recourse: never owe more than the home is worth
  • Can be used to purchase a home (HECM for Purchase)

    • How Reverse Mortgage Loans Work

    Confirm age and equity

    At least one borrower must be 62 or older and the home must be your primary residence with substantial equity. The older you are and the more equity you hold, the larger the available principal limit.

    Complete HUD-approved counseling

    Independent counseling is required before an application can proceed. It is a consumer protection, and it is the step that answers most families' questions.

    Choose how you receive funds

    A lump sum, fixed monthly tenure payments, a growing line of credit, or a combination. The line of credit is unique in that the unused portion grows over time.

    Keep up taxes, insurance and upkeep

    There is no monthly principal and interest payment, but you must continue paying property taxes and homeowners insurance and maintain the home to keep the loan in good standing.

    Repayment is non-recourse

    When the loan ends, heirs may repay the balance and keep the home, or sell it. Because HECMs are non-recourse, neither you nor your heirs ever owe more than the home's value at sale.

    Reverse Mortgage Loans Requirements at a Glance

    Minimum age

    62 for at least one borrower

    Occupancy

    Primary residence only

    Equity

    Significant equity; existing liens paid at closing

    Counseling

    HUD-approved session required

    Financial assessment

    Ability to cover taxes, insurance, upkeep

    What it costs

    HECM costs include an FHA mortgage insurance premium charged upfront and annually, an origination fee, and standard third-party closing costs. Most of these can be financed into the loan, though doing so increases the balance that accrues interest.

    Things to Consider

  • The loan balance grows over time, reducing equity left to heirs
  • Upfront costs include an FHA insurance premium and origination fee
  • Property taxes, insurance, and maintenance remain your responsibility
  • Moving out for more than 12 months triggers repayment
  • May affect need-based benefits such as Medicaid — check with an advisor

    • Reverse Mortgage Loans FAQs

    Do I still own my home with a reverse mortgage?

    Yes. You remain on title. The lender records a lien, exactly as with a traditional mortgage, but ownership does not transfer.

    What happens to my heirs?

    When the loan comes due, heirs can repay the balance and keep the home, refinance it, or sell it and keep any remaining equity. HECMs are non-recourse, so the debt never exceeds the home's value at sale.

    Can a reverse mortgage be foreclosed?

    Only if you stop paying property taxes or homeowners insurance, fail to maintain the home, or no longer live there as your primary residence.

    How much money can I get?

    The principal limit depends on the age of the youngest borrower, current interest rates, and your home's appraised value up to the FHA maximum claim amount.

    Is reverse mortgage money taxable?

    Loan proceeds are generally not treated as taxable income, but confirm your situation with a tax professional.

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