Who qualifies for a reverse mortgage?

You must be at least 62 years old (for HECM), own your home outright or have significant equity, live in the home as your primary residence, and be current on property taxes and homeowners insurance. The home must meet FHA property standards.

Will a reverse mortgage affect my Social Security or Medicare?

Reverse mortgage proceeds do not affect Social Security or Medicare benefits because they are loan proceeds, not income. However, they may affect Medicaid or Supplemental Security Income (SSI) eligibility if the funds are not spent in the month received. Consult a benefits counselor if you receive means-tested benefits.

What happens to the home when I pass away?

Your heirs have 6–12 months to repay the loan and keep the home, or sell the home and keep any remaining equity. Because reverse mortgages are non-recourse loans, heirs are never personally liable for any shortfall if the loan balance exceeds the home's value.

Can I lose my home with a reverse mortgage?

Yes, but only if you fail to meet the loan obligations: paying property taxes, maintaining homeowners insurance, keeping the home in good repair, and living in it as your primary residence. These are the most common reasons for reverse mortgage defaults.

Is HUD counseling required?

Yes. Before applying for a HECM, you must complete a counseling session with a HUD-approved housing counselor. The session covers alternatives to a reverse mortgage, costs, and your obligations. Counseling costs $125–$200 and can be done by phone.

Homeowner resource

Reverse Mortgages Guide: How They Work, What They Cost & Who They're Right For

A reverse mortgage lets homeowners 62 and older convert home equity into tax-free income — without selling or making monthly payments. Here's what you need to know.

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How a Reverse Mortgage Works

A reverse mortgage is a loan against your home's equity that doesn't require monthly repayment. Instead, the loan balance grows over time and is repaid when you sell, move out, or pass away.

You borrow against your home equity

The amount you can borrow (the principal limit) is based on your age, the home's appraised value, and current interest rates. The older you are and the more equity you have, the more you can access.

No monthly mortgage payments required

Unlike a traditional mortgage or home equity loan, you are not required to make monthly payments. The loan balance grows as interest accrues. You must continue paying property taxes, homeowners insurance, and maintenance.

You receive funds in your chosen form

You can receive funds as a lump sum, monthly payments, a line of credit, or a combination. The line of credit option grows over time, which can be a powerful planning tool.

The loan is repaid when you leave the home

Repayment is triggered when the last borrower sells the home, moves out permanently, or passes away. Heirs can repay the loan and keep the home, or sell the home and keep any remaining equity.

Types of Reverse Mortgages

Most reverse mortgages are federally insured HECMs, but proprietary options exist for higher-value homes.

HECM (Home Equity Conversion Mortgage)

Up to $1,149,825 (2024 limit)

The most common type, insured by the FHA. Requires HUD-approved counseling before application. Available to homeowners 62 and older. Flexible payout options.

Best for: Most homeowners 62+Federally insured: Yes — FHA insured

HECM for Purchase

Up to $1,149,825

Allows seniors to buy a new primary residence using a reverse mortgage. Combines the purchase price with reverse mortgage proceeds — no monthly mortgage payments on the new home.

Best for: Downsizing or relocating seniorsFederally insured: Yes — FHA insured

Proprietary (Jumbo) Reverse Mortgage

$4M+ depending on lender

Private loans not insured by the FHA, designed for high-value homes that exceed the HECM limit. Typically offer higher loan amounts but fewer consumer protections.

Best for: High-value homes ($1M+)Federally insured: No federal insurance

Single-Purpose Reverse Mortgage

Varies

Offered by some state and local government agencies and nonprofits for a specific purpose (home repairs, property taxes). The lowest-cost option but very limited availability.

Best for: Low-income homeowners with a specific needFederally insured: Varies by program

Reverse Mortgage Costs

Reverse mortgages have significant upfront costs. Understanding them helps you evaluate whether the product makes financial sense for your situation.

Cost Item	Typical Range	Notes
Origination fee	Up to $6,000 (HECM)	Capped by FHA for HECMs. Proprietary loans may charge more.
FHA mortgage insurance premium (MIP)	2% upfront + 0.5%/year	Protects you if the lender fails and ensures you never owe more than the home's value.
Closing costs	$2,000 – $6,000	Appraisal, title insurance, recording fees — similar to a traditional mortgage.
Servicing fee	Up to $35/month	Added to the loan balance monthly. Many lenders set aside a servicing fee set-aside at closing.
Interest	Variable or fixed rate	Interest accrues on the outstanding balance. Fixed rates are only available with lump-sum payouts.

Pros and Cons

Advantages

No monthly mortgage payments required
Proceeds are tax-free (not considered income)
You retain ownership and can stay in the home
Non-recourse loan — you never owe more than the home's value
Line of credit grows over time, providing a financial safety net
Surviving spouse protections for eligible non-borrowing spouses

Drawbacks & Risks

Significant upfront costs reduce net equity
Loan balance grows over time, reducing inheritance for heirs
Must continue paying property taxes, insurance, and maintenance
Loan becomes due if you move out for more than 12 consecutive months
Reduces options for using home equity later
Complex product — requires careful counseling and planning

Frequently Asked Questions

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