Reverse Mortgage Questions, Answered Honestly.

A reverse mortgage is a loan that allows homeowners age 62 or older to convert part of the equity in their homes into cash. Unlike a traditional mortgage, you don't make monthly payments. The loan is repaid when the homeowner permanently leaves the home — typically when they sell, move, or pass away. The most common type is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA).

After you apply and meet the eligibility requirements, the lender evaluates your home's value, your age, and current interest rates to determine how much you can borrow. You can receive the funds as a lump sum, monthly payments, a line of credit, or a combination of these. The interest accrues on the loan balance over time, and the loan becomes due when the last borrower permanently leaves the home.

To qualify, at least one homeowner must be 62 years or older, own the home (or have a low mortgage balance that can be paid off at closing), use the home as a primary residence, and receive counseling from a HUD-approved counselor. The home must meet FHA property standards. There are no income or credit score requirements, though lenders do verify the ability to pay property taxes, insurance, and home maintenance.

It's a loan — with interest and fees — just like any other mortgage. The difference is in how repayment works. You don't make monthly payments while living in the home. The loan balance grows over time as interest accrues, and it's repaid when the home is sold or the loan comes due. Think of it as accessing money you've already earned through years of mortgage payments and home appreciation.

The main costs include an upfront Mortgage Insurance Premium (MIP) of 2% of the home's value (or the lending limit, whichever is less), an origination fee (capped at $6,000 by HUD), closing costs (similar to a traditional mortgage), and annual servicing fees. Interest accrues on the balance monthly. These costs are typically financed into the loan itself, so you pay nothing out of pocket at closing.

Yes. You're responsible for paying property taxes, homeowner's insurance, home maintenance, and any HOA fees. The lender also charges an annual servicing fee. Failure to pay property taxes or insurance can trigger a loan default, which is why we discuss these obligations thoroughly before you decide.

Because of the non-recourse feature, you (or your heirs) will never owe more than the home is worth at the time of sale. If the loan balance exceeds the home's value, the FHA insurance covers the difference. The lender cannot pursue you or your heirs for any shortfall. This is one of the strongest consumer protections in any mortgage product.

You can choose from: a lump sum (fixed-rate only), monthly payments for as long as you live in the home (tenure payments), monthly payments for a set number of years (term payments), a line of credit you can draw from as needed, or a combination of any of these. The line of credit is particularly popular because the unused portion grows over time at the same rate as the loan interest.

The amount depends on your age, the home's appraised value, current interest rates, and the lending limit (currently $1,149,825 for a HECM in 2024). Generally, the older you are and the more your home is worth, the more you can borrow. A HUD-approved counselor or your loan officer can run specific numbers for your situation.

Yes, in many cases. The proceeds from the reverse mortgage can be used to pay off your existing mortgage first. Any remaining funds are available to you. This can actually improve your monthly cash flow because you're eliminating a mortgage payment while potentially gaining access to additional funds.

When the last borrower dies, the loan becomes due. Your heirs have several options: they can sell the home and use the proceeds to repay the loan (keeping any surplus), they can pay off the loan and keep the home, or they can negotiate a short sale if the home is worth less than the loan balance. HUD gives heirs up to 30 days to notify the servicer and up to 6 months to complete the sale or payoff.

Yes — the home remains in your estate. Your heirs can inherit the home, but they'll need to satisfy the loan balance. If the home is worth more than the loan, they keep the difference. The key is understanding that the reverse mortgage doesn't transfer the home to the lender — it creates a lien on the property that must be repaid, just like any other mortgage.

A reverse mortgage does not affect Social Security or Medicare benefits. However, it can affect Medicaid and Supplemental Security Income (SSI) because those are need-based programs. If loan proceeds are not spent in the month they're received, they may be counted as assets. Consult with an elder law attorney or financial advisor before making decisions if either of these benefits is relevant.

Before you can close on a HECM reverse mortgage, you must complete a counseling session with a HUD-approved counselor. This is a consumer protection — the counselor works for you, not the lender. They'll explain the costs, obligations, alternatives, and help you understand whether a reverse mortgage is truly the best option for your situation. The session typically takes about 60–90 minutes and can be done by phone or in person.

From application to closing, the process typically takes 30–45 days. This includes the counseling session, home appraisal, underwriting, and closing. The timeline can vary depending on your specific situation and any conditions that need to be resolved.

Absolutely. A reverse mortgage is a significant financial decision that affects your estate, your cash flow, and your tax situation. We always recommend consulting with your attorney, accountant, or financial advisor to ensure a reverse mortgage fits into your overall financial plan. This site is educational — a qualified professional can help you make the right decision for your specific circumstances.