Explore this guide
What stays your responsibility?
With a HECM, the home must remain your principal residence. You must pay property taxes and required insurance, maintain the home, and meet the other loan requirements. Applicable association dues and property charges also belong in your budget. Failing to meet these obligations can make the loan due and lead to foreclosure.
A reverse mortgage places a lien on your home; it does not transfer ownership to the lender. The amount borrowed still has to be repaid under the loan's terms. CFPB: ownership and responsibilities
HECM or proprietary reverse mortgage?
These are different program categories. An interest-rate choice or payout method is another part of the comparison.
| What to compare | FHA-insured HECM | Proprietary reverse mortgage |
|---|---|---|
| Program | Home Equity Conversion Mortgage insured by the Federal Housing Administration | Private program that is not FHA-insured |
| Age | Borrowers must be at least 62 | Some programs serve younger homeowners; minimum ages vary |
| Existing mortgage | Existing mortgage debt must be paid off at closing | Requirements vary; certain second-lien programs can leave a first mortgage in place |
| Qualification | Eligible principal residence, sufficient equity, financial assessment and required counseling | Age, property, equity, financial and counseling requirements depend on the program |
| Terms to review | Costs, available proceeds, payout choice and HECM protections | Costs, payout choices, lien position and the specific borrower and family protections |
Age alone does not establish eligibility. For a HECM, the lender also considers the property and your ability to meet ongoing obligations. CFPB: HECM eligibility
Proprietary loans can differ substantially from HECMs. Do not assume a private program includes the same features or protections, or that every advertised program is available for your situation. CFPB: types of reverse mortgages
Will it replace your first mortgage or sit behind it?
A first-position reverse mortgage: With a HECM, your existing mortgage must be paid off at closing. Proceeds and, when necessary, your own funds can cover that payoff. Eliminating the old mortgage removes its required principal-and-interest payment, but taxes, insurance and other obligations remain. The payoff and closing costs also reduce the proceeds left for other uses.
A proprietary reverse second mortgage: Certain programs can leave your existing first mortgage in place. You must continue making the first mortgage's required payments and meeting its other terms. The second loan can add a growing balance secured by the same home, even if it requires no new monthly principal-and-interest payment.
For example, a lender's reverse-second product expressly requires borrowers to maintain their first-lien obligations. Availability must be confirmed for your property and circumstances. Finance of America: reverse-second structure
How much could you access, and how would you receive it?
There is no single borrowing percentage that fits everyone. For a HECM, age, the interest rate and the applicable property-value or program limit help determine available proceeds. The youngest borrower's or eligible nonborrowing spouse's age can matter. Existing debt, transaction costs and required set-asides can reduce the amount available for your goals. HUD: HECM overview
Depending on the selected program, proceeds may be available as a lump sum, a line of credit, scheduled payments or a combination. Fixed versus adjustable describes the interest rate, not a separate way to receive money. Ask which choices are available together, when you can access funds, and whether amounts repaid to a credit line can be borrowed again.
Compare costs and the future loan balance
A HECM can include origination and third-party closing costs, FHA mortgage insurance, interest and applicable servicing charges. Proprietary products have their own pricing and fees. Financing a cost means adding it to the debt, rather than making the cost disappear.
Unpaid interest is added to the balance, so interest can accrue on a larger balance over time. Borrowing more or keeping the loan longer can increase total costs and leave less equity available later.
Ask for a written illustration showing cash available after payoffs and costs, expenses you must keep paying, and how the balance could change over time. Compare that with how long you expect to remain in the home. CFPB: reverse mortgage costs
Discuss spouses, other residents and heirs early
For a HECM, a surviving co-borrower can generally continue receiving loan benefits while meeting the obligations. A spouse who is not a borrower has a different position: an eligible nonborrowing spouse may qualify to remain in the home with repayment deferred, subject to HUD's conditions and the loan's timing. That spouse does not receive additional loan advances.
Other relatives living in the home do not automatically receive the same protection. Before signing, identify who will be a borrower and how a death, permanent move or extended healthcare stay would affect everyone else.
When repayment becomes required, heirs should promptly contact the servicer about selling, paying off the loan or other available options and deadlines. Review proprietary-loan protections separately rather than assuming HECM rules apply. CFPB: spouses and heirs
Use counseling to compare the decision
HECM applicants must complete counseling with a HUD-approved reverse mortgage counselor. Counseling explains costs, financial implications and alternatives; it does not guarantee approval or mean the loan is the best fit. Find independent HECM counseling resources through HUD.
Depending on your circumstances, compare a traditional refinance or other home equity options, waiting to borrow, or selling and moving to a less expensive home. Each has its own qualifications, payments and tradeoffs. A counselor can help organize that comparison. FTC: counseling and alternatives
For more background on the federally insured program, read our HECM reverse mortgage guide.
Five common questions
Can I qualify before age 62?
HECM borrowers must be at least 62. Some proprietary programs have different minimum ages. Availability depends on the specific program, borrower and property.
Will I still own my home?
Yes. You retain title, subject to the mortgage lien and your loan obligations. Keeping ownership does not remove repayment requirements.
Does a reverse mortgage eliminate every monthly housing expense?
No. Property expenses remain. If a reverse second leaves your first mortgage in place, that first mortgage's required payments continue too.
Can my spouse stay if I die first?
It depends on borrower status, the program and its conditions. HECM co-borrower and eligible nonborrowing-spouse protections differ. Review your household's arrangement before closing.
Who can I talk with about reverse mortgages in San Luis Obispo County?
Sean Mertens at Assist Home Loans offers HECM, proprietary/jumbo reverse mortgages and reverse second mortgages for eligible homeowners in San Luis Obispo County. Talk with Sean about your property, existing mortgage and goals, or call 805-540-9909. Specific availability and qualification depend on your circumstances. Compare written loan terms and use independent counseling to understand the decision.
Bring these details to a consultation
- Your goals and how long you expect to stay in the home.
- Home location, property type and estimated value.
- Mortgage and other lien balances, rates and monthly payments.
- Taxes, insurance, association dues, maintenance and household budget.
- Homeowner ages, other residents and family or estate considerations.
- Questions about alternatives, fees, available proceeds and future balances.
