Reverse Mortgages: Converting Home Equity for Homeowners 62+

A reverse mortgage allows eligible homeowners aged 62 or older to convert a portion of their home equity into funds without making monthly mortgage payments. The loan is repaid when the borrower moves, sells, or passes away.

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What Is a Reverse Mortgage?

A reverse mortgage is a type of home loan that allows eligible homeowners to borrow against the equity in their home without making monthly mortgage payments. Instead of you paying the lender, the lender advances funds to you based on your home’s equity. The loan balance grows over time and is repaid when the last borrower leaves the home, sells, or passes away.

The most common type is the Home Equity Conversion Mortgage (HECM), which is insured by the FHA and regulated by HUD.

Who Reverse Mortgages May Fit

A reverse mortgage may be worth exploring if you:

  • Are 62 or older (all borrowers on title must meet the age requirement)
  • Own your home outright or have significant equity
  • Plan to remain in the home as your primary residence
  • Want to supplement retirement income, eliminate a mortgage payment, or fund home improvements
  • Have met with an independent HUD-approved counselor (required for HECM loans)

How Funds Can Be Received

HECM borrowers can choose how to receive funds:

  • Lump sum (fixed rate only)
  • Line of credit (grows over time if unused)
  • Monthly payments (term or tenure)
  • Combination of the above

What You Still Owe

Even without a monthly mortgage payment, reverse mortgage borrowers are still responsible for:

  • Property taxes
  • Homeowner’s insurance
  • HOA dues (if applicable)
  • Basic home maintenance

Failure to maintain these obligations can result in the loan becoming due.

HUD Counseling Requirement

Before applying for a HECM, borrowers are required to complete a counseling session with an independent HUD-approved housing counselor. This counseling is designed to ensure borrowers understand the product, the obligations, and the alternatives.

Benefits

  • No monthly mortgage payment required (as long as you remain in the home and meet loan obligations)
  • Proceeds are generally not taxable as income (consult a tax advisor)
  • Non-recourse loan: you or your heirs won’t owe more than the home is worth at payoff
  • Line of credit grows over time if unused (HECM)

Limitations

  • Must be 62 or older
  • Primary residence only
  • Loan balance grows over time, reducing equity
  • FHA MIP required on HECMs
  • Loan becomes due if you move, sell, or pass away
  • Estate planning implications should be discussed with an advisor

Frequently Asked Questions

What is the minimum age for a reverse mortgage?

The minimum age for a HECM reverse mortgage is 62. All borrowers listed on the title must be at least 62. A younger non-borrowing spouse can remain in the home under certain conditions, but this affects the available loan amount. Talk with a loan officer about your specific situation and how a non-borrowing spouse may be affected.

Do I have to make monthly mortgage payments on a reverse mortgage?

No monthly mortgage payment is required as long as you live in the home as your primary residence, maintain the property, and keep property taxes and homeowner's insurance current. Failure to meet these obligations can trigger the loan to become due and payable.

How much money can I get from a reverse mortgage?

The amount you can access depends on your age, home value, current interest rates, and the loan program. Generally, the older you are and the more equity you have, the more you can access. HECM proceeds cannot exceed FHA loan limits. A loan officer can provide a no-obligation estimate based on your home's value and your age.

What happens to my home when I pass away?

When the last borrower passes away or permanently leaves the home, the loan becomes due. Heirs have options: repay the loan balance and keep the home, sell the home and keep any equity above the loan balance, or let the lender sell the home. HECM loans are non-recourse, so heirs will never owe more than the home's appraised value at the time of sale.

Is HUD counseling required for a reverse mortgage?

Yes. HUD counseling is mandatory for all HECM reverse mortgages. Before applying, you must complete a session with an independent HUD-approved housing counselor who will explain how the product works, costs, alternatives, and obligations. This counseling protects borrowers and is required before a lender can proceed with your application.

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