Reverse Mortgages
Updated August 2026
A reverse mortgage can turn part of a homeowner’s equity into loan proceeds without required monthly principal-and-interest payments. It may help with retirement income, repairs, debt payoff, or aging in place—but it is still a mortgage, and the balance usually grows over time.
This guide focuses on the FHA-insured Home Equity Conversion Mortgage (HECM), the most common reverse mortgage. Proprietary products can work differently.
How a HECM works
A HECM is generally available to eligible homeowners age 62 or older. The borrower keeps title to the home. Loan proceeds may be available as a lump sum, monthly payments, a line of credit, or a combination, depending on the loan option and current rules.
Interest, mortgage-insurance charges, and financed fees are added to the loan balance. No required monthly principal-and-interest payment is due while the loan remains in good standing.
What the homeowner must keep paying
The borrower must continue to:
Live in the home as a principal residence
Pay property taxes and homeowners insurance
Maintain the property
Pay applicable HOA dues and other property charges
Follow the loan’s occupancy and certification requirements
Failure to meet these obligations can cause the loan to become due.
Who may qualify?
Every borrower is generally at least 62
The home is an eligible principal residence
There is enough equity to pay existing liens and support the HECM
The borrower completes HUD-approved counseling
The lender’s financial assessment supports the borrower’s ability to meet ongoing obligations
A younger spouse may be a non-borrowing spouse rather than a co-borrower. That choice can affect available proceeds and future occupancy protections, so review it carefully with the counselor, lender, and an independent adviser.
Benefits
No required monthly principal-and-interest payment while the loan is in good standing
Several ways to receive or access proceeds
The borrower remains the homeowner
HECMs are generally non-recourse: repayment is limited by program protections tied to the home’s value
Costs and tradeoffs
Reverse mortgages can include an origination charge, appraisal, title and closing costs, servicing-related charges, and FHA mortgage insurance. Because interest and fees accrue, equity available to the homeowner or heirs generally declines over time.
A HECM can also affect future housing flexibility. Selling or moving permanently usually makes the loan due, so consider how long the home is likely to remain the primary residence.
What happens when the loan becomes due?
The loan generally becomes due when the last borrower or eligible non-borrowing spouse dies, sells, or permanently leaves the home. It may become due sooner if taxes, insurance, maintenance, or other loan obligations are not met.
Heirs may sell the home, repay the balance and keep it, or allow the lender to complete the available process. If the balance exceeds the home’s value, HECM rules generally allow the home to be retained by paying the lesser of the debt or 95% of the appraised value, subject to current requirements and deadlines.
Alternatives worth comparing
A traditional refinance
A home-equity loan or HELOC
Selling and downsizing
A property-tax relief or deferral program
Family assistance or a shared-equity arrangement
Using other assets before borrowing against the home
The best choice depends on cash flow, credit, income, time in the home, estate goals, and comfort with a growing balance.
Frequently asked questions
Does the lender own the home?
No. The homeowner keeps title, subject to the mortgage lien and loan requirements.
Can the homeowner be forced to leave?
Not simply because the balance grows. However, the loan can become due if the home is no longer the principal residence or required property obligations are not met.
Is counseling required?
Yes. HECM applicants must complete counseling with a HUD-approved counselor before the loan can proceed.
Review the decision in context
A reverse mortgage can be useful, but it should be compared with realistic alternatives and discussed with family or trusted advisers when appropriate. I can explain the mortgage side clearly and help you prepare the questions to take into required counseling.
