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1Fix the driver behind crashes, sound loss and screen glitches2Repair Windows errors before they cause bigger problems3Scan for outdated or missing drivers - takes under a minuteA reverse mortgage is a loan secured by your home that lets an eligible homeowner convert part of their equity into cash without making required monthly mortgage payments. You keep title to the property, but interest, mortgage-insurance premiums, and other charges are added to the loan balance. The balance is generally repaid when the last borrower dies, sells the home, or stops living there as a principal residence.
The most common type is the federally insured Home Equity Conversion Mortgage (HECM). HECM borrowers must be at least 62, use the property as their principal residence, meet financial and property requirements, and complete counseling with a HUD-approved agency. A reverse mortgage can provide cash-flow relief, but it does not eliminate housing costs: you still have to pay property taxes and insurance and maintain the home.
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How a reverse mortgage works
A reverse mortgage works in the opposite direction of a traditional mortgage. With a traditional mortgage, you make payments and build equity over time. With a reverse mortgage, the lender advances money against the equity you already have. Your home secures the debt, and you remain the owner.
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Instead of sending required monthly mortgage payments to the lender, you generally receive proceeds according to the payment option selected in the loan documents. Interest and fees accrue on the amount owed, so the outstanding balance normally grows rather than shrinks. The exact proceeds depend on factors such as your age, the interest rate, and the home’s value. A lender must calculate the current amount available; a generic percentage or online estimate is not a loan quote.
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What you still owe each month
“No monthly mortgage payment” does not mean “no monthly housing expense.” You remain responsible for property taxes, homeowners insurance, and repairs needed to keep the property in good condition. You may also have ongoing servicing charges and annual mortgage insurance. If you fail to pay required property charges or allow the home to deteriorate, the loan can go into default and foreclosure can become a risk.
When repayment is triggered
The HECM balance is generally due when the last surviving borrower or an eligible non-borrowing spouse dies, the home is sold, or the last borrower no longer occupies it as a principal residence. A prolonged absence for medical care can affect the occupancy requirement. The loan is also typically payable if another event in the loan documents makes it due, so read the specific agreement before closing.
HECM and other reverse mortgages
Most reverse mortgages are HECMs, which are insured by the Federal Housing Administration. HECM rules establish the familiar age, occupancy, counseling, insurance, and spouse protections described in this guide. Proprietary reverse mortgages are non-HECM products offered under individual lenders’ terms. Their eligibility rules, fees, proceeds, interest structure, and protections can differ, so do not assume that an explanation of HECM requirements applies to every reverse mortgage.
| Loan type | What the evidence establishes | What to verify before applying |
|---|---|---|
| HECM | Federally insured; generally for homeowners age 62 or older who occupy the property as a principal residence; HUD-approved counseling is required. | Current lender calculation, interest-rate structure, fees, property requirements, and how a spouse or heirs are treated. |
| Proprietary reverse mortgage | Non-HECM reverse mortgage with lender-specific requirements and features. | Age and occupancy rules, insurance or guarantees, available proceeds, costs, repayment terms, and spouse provisions. |
Who can qualify for an HECM
Eligibility is more than reaching a particular birthday. A prospective HECM borrower generally must satisfy all of the following conditions:
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- Age: At least 62 years old.
- Occupancy: The property must be your principal residence.
- Equity and existing debt: You generally need to own the home outright or have a mortgage balance low enough to be paid off at closing from the reverse-mortgage proceeds or other funds.
- Property standards: The home must meet applicable property requirements. Condition problems may need to be repaired before or after closing, depending on the lender’s decision.
- Financial obligations: Federal debt and other financial circumstances are considered, as is your ability to pay future property charges.
- Counseling: You must complete counseling with a HUD-approved reverse-mortgage counseling agency.
Eligibility is determined for the specific borrower, property, and loan terms. A homeowner who meets the age test can still be declined or required to resolve an existing mortgage, tax issue, property defect, or inability to cover ongoing charges.
What counseling is supposed to cover
Required counseling is intended to be an independent review of the decision, not merely a description of one lender’s product. The session should address:
- whether you and the property appear to meet HECM requirements;
- the financial effect of adding interest and fees to the balance;
- how a spouse, dependents, or other occupants could be affected;
- available ways to receive proceeds and how repayment works; and
- alternatives such as waiting, a home-equity loan or line of credit, refinancing, downsizing, or reducing expenses.
Complete counseling before committing to a loan. Ask the counselor to explain the consequences if you move, enter long-term medical care, fall behind on taxes or insurance, or want your family to keep the home.
What a reverse mortgage costs
Costs reduce the cash available at closing and can increase the balance for as long as the loan remains outstanding. The following figures come from Consumer Financial Protection Bureau consumer guidance published in 2024; they are not an individualized quote.
| Cost | Amount or treatment |
|---|---|
| HECM origination fee | May not exceed $6,000 under the CFPB guidance cited above. |
| Annual mortgage-insurance premium | 0.5% of the outstanding mortgage balance, according to the same CFPB guidance. |
| Initial mortgage insurance | An upfront premium may apply and can be financed as part of the loan. |
| Third-party closing charges | May include appraisal, title search, inspection, recording, and other closing services. |
| Ongoing charges | Interest, servicing fees, annual mortgage insurance, property taxes, homeowners insurance, and possibly flood insurance. |
If you finance fees instead of paying them from other funds, those fees reduce the proceeds you can use and become part of the balance on which future charges may accrue. Ask for an itemized estimate showing which charges are paid at closing, which are financed, and whether any lender-specific fees are recurring.
Why the balance can grow substantially
Each period’s interest and applicable charges are added to what you owe. Because you are not required to make regular mortgage payments, there is usually no scheduled principal reduction. The longer the loan remains open and the more proceeds you draw, the larger the balance can become. Compare the rate structure, insurance costs, servicing charges, and projected balance over the time you expect to remain in the home rather than focusing only on the initial cash amount.
Your responsibilities after closing
A reverse mortgage transfers payment timing, not your basic responsibilities as a homeowner. For an HECM, you must continue to:
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- Live in the property as your principal residence. Tell the servicer about a move or an extended absence. A long stay in medical care may affect whether the occupancy requirement is met.
- Pay property charges on time. This includes property taxes and homeowners insurance, plus flood insurance when required.
- Maintain the home. Keep the property in good repair and address conditions that could threaten its value or safety.
Failure to meet these duties can place the loan in default and may lead to foreclosure, even though no monthly mortgage payment is required. Set aside a realistic reserve for taxes, insurance, and maintenance before using the proceeds for discretionary spending.
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What happens when the borrower dies, moves, or sells
Death of the last borrower
When the last borrower dies, the HECM generally becomes due. The estate or heirs can learn the payoff amount and decide whether to sell the home, use other funds to repay the loan, or take another action allowed by the loan documents. Family members who want to keep the property normally need another source of funds to pay off the reverse mortgage.
A spouse who is not a co-borrower
A spouse who did not sign as a borrower may be able to remain in the home under HUD’s eligible non-borrowing-spouse rules if all conditions are met. Eligibility depends on the specific facts and continuing requirements; marriage alone is not a guarantee. Discuss the spouse’s status with the counselor and lender before closing and keep the required documentation current.
Moving or selling
Selling the home ordinarily requires repayment from the sale proceeds. Moving out and establishing another principal residence generally triggers repayment as well. Because occupancy is a continuing requirement, tell the servicer before a planned move or extended absence so you understand the deadlines and available options.
How much can you receive?
There is no universal reverse-mortgage amount. The available proceeds are calculated using the borrower’s age, the home’s value, the interest rate, and the loan’s costs and requirements. Existing mortgage debt must also be considered because it may have to be paid off at closing. Two homeowners with similar properties can therefore receive different amounts.
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Ask the lender for a current written calculation that separates:
- the amount available at closing;
- any funds reserved for required repairs or property charges;
- the portion used to pay an existing mortgage;
- upfront fees and insurance premiums; and
- the remaining amount available under the selected payment arrangement.
Do not treat an advertised maximum as your expected proceeds. Rates, property values, lender charges, and program limits are time-sensitive, and only a current calculation for your application can establish the amount.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Comparing a reverse mortgage with alternatives
A reverse mortgage is one way to use home equity, not an automatic solution for a cash shortfall. Compare the following paths during counseling and with an independent financial professional when appropriate.
| Option | Questions to compare |
|---|---|
| HECM reverse mortgage | Will the proceeds meet your need after fees and any existing mortgage payoff? Can you reliably pay taxes, insurance, and maintenance? How will a growing balance affect a spouse or heirs? |
| Proprietary reverse mortgage | How do the lender’s eligibility rules, costs, rate structure, proceeds, insurance, and spouse provisions differ from an HECM? |
| Home-equity loan or line of credit | What payment, income, credit, collateral, rate, and access requirements apply, and can you afford the required payments? |
| Refinancing | Would replacing the existing mortgage improve the payment or rate after considering closing costs and the length of time you expect to stay? |
| Downsizing | Could selling and moving release equity while reducing taxes, insurance, maintenance, or other housing expenses? |
| Waiting or reducing expenses | Could delaying the loan, cutting recurring costs, or using another income source solve the shortfall without borrowing against the home? |
A practical decision process
- Define the need. Separate a one-time expense from an income gap that may continue for years. Borrowing more than necessary increases the balance.
- Confirm occupancy and family plans. Identify who lives in the home, how long you expect to stay, and whether a spouse or heirs may need to remain there.
- Complete HUD-approved counseling. Bring questions about costs, proceeds, repayment, taxes, insurance, repairs, and alternatives.
- Obtain current comparisons. Request a written HECM calculation and, if considering a proprietary product or another loan, compare total costs and payment obligations on the same assumptions.
- Plan for property charges. Create a reserve or payment system for taxes, insurance, repairs, and any flood-insurance requirement.
- Review the exit plan. Decide what would happen if you move, enter long-term care, sell, or die. Make sure the people who may handle the estate understand that the home secures the debt.
Common misunderstandings to avoid
- “The bank owns my house.” You generally keep title. The lender has a security interest, and the loan balance is secured by the property.
- “I never owe anything while I live there.” Taxes, insurance, maintenance, interest, and other charges still apply. Missing the homeowner duties can lead to default.
- “My children automatically inherit the home free and clear.” The balance is generally due after the last borrower dies. Heirs who want the property must address the payoff through the estate or other funds.
- “Every reverse mortgage follows HECM rules.” Proprietary products can have different requirements and protections.
- “The advertised amount is what I will receive.” The actual proceeds depend on your age, rate, home value, existing debt, costs, and lender calculation at the time of application.
Bottom line: when a reverse mortgage may fit
A reverse mortgage may fit an older homeowner who plans to remain in the principal residence, has substantial equity, needs additional cash flow, and can reliably pay taxes, insurance, and maintenance. It is less suitable when a move is likely soon, the homeowner cannot sustain property charges, or preserving the home for heirs is the overriding goal.
Before signing, complete the required counseling, compare an HECM with proprietary and non-reverse alternatives, obtain a current itemized cost and proceeds calculation, and make a clear plan for repayment after a sale, move, or death. The absence of a required monthly mortgage payment is valuable only if the borrower can meet every other obligation attached to the home.
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