Reverse mortgages

A reverse mortgage lets homeowners 62 and older borrow against their equity without a required monthly mortgage payment. The balance is repaid when the last borrower leaves the home.

Reviewed by Shawn Way, NMLS #1007298★ 4.9 from 111 reviewsUpdated October 28, 2026

How a HECM works

• Age: the youngest borrower must be 62. Some proprietary programs start younger where state law allows.
• Home: your primary residence, with substantial equity. An existing mortgage is paid off from the proceeds.
• Counseling: a session with a HUD-approved counselor is required before you apply.
• Payout: lump sum, monthly payments, a line of credit, or a combination. An unused HECM line grows over time.
• Repayment: due when the last borrower sells, moves out for more than 12 months, or dies. It's non-recourse: you or your heirs never owe more than the home is worth.

Costs

FHA mortgage insurance is 2% of the home value (up to the limit) at closing plus 0.5% a year on the balance. There are also origination and standard closing costs, which can usually be financed.

What heirs should know

Heirs can keep the home by paying off the loan, or the lesser of the balance and 95% of the home's value. They can also sell it and keep any equity left. An eligible non-borrowing spouse may be able to stay in the home.

How is a reverse mortgage different from a HELOC?

A HELOC needs income to qualify and requires monthly payments, while a reverse mortgage for homeowners 62 and older needs neither. The reverse mortgage balance is repaid when the last borrower sells, moves out for more than 12 months, or dies. Compare them side by side.

How much you can get

The amount, called the principal limit, depends on the age of the youngest borrower (or eligible non-borrowing spouse), the expected interest rate, and the home's value up to the HECM limit. Older borrowers and lower rates mean a higher percentage. Existing mortgages are paid off from the proceeds first; what's left is available to you, with limits on how much you can take in the first year.

Choosing a payout

• Line of credit: draw when needed; the unused portion grows over time.
• Tenure: monthly payments for as long as you live in the home.
• Term: larger monthly payments for a set number of years.
• Lump sum: available with a fixed-rate HECM.

Counseling and protections

Before applying, you must meet with an independent HUD-approved counselor. Eligible non-borrowing spouses can stay in the home after the borrower dies, if they meet the requirements. Lenders run a financial assessment of your ability to pay taxes and insurance, and may set aside money in a "life expectancy set-aside" to cover them.

HECM for Purchase

Buyers 62 and older can use a reverse mortgage to buy a new home, putting down a large portion of the price and financing the rest with no required monthly mortgage payment. It's often used to downsize or move closer to family.

Proprietary (jumbo) reverse mortgages

For homes worth well above the HECM limit, private programs lend more, and some start at age 55 where state law allows. They don't carry FHA insurance, and terms vary by lender.

Example

A 72-year-old with a $700,000 home and a $120,000 mortgage takes a HECM. Roughly half the home's value is available at current rates. The HECM pays off the $120,000 mortgage, eliminating a $1,100 monthly payment, and leaves a line of credit for future needs. She still pays taxes and insurance. When she sells or passes away, the balance is repaid from the home.

Also asked

Can I sell a home with a reverse mortgage?

Yes. The loan is repaid from the sale, and you keep the remaining equity. If the home sells for less than the balance, FHA insurance covers the shortfall on a HECM.

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