Reverse Mortgages (HECM)

Access home equity without monthly payments for seniors 62 and older

What is a Reverse Mortgage?

A reverse mortgage, officially called a Home Equity Conversion Mortgage (HECM), allows homeowners 62 and older to convert part of their home equity into cash without selling their home or making monthly mortgage payments. The loan is repaid when the borrower moves, sells, or passes away.

No Monthly Payments

Stay in your home without mortgage payments

Retain Ownership

You remain the owner of your home

FHA Insured

Government backing provides protections

HECM Benefits

62+
Minimum age requirement
$0
Monthly payments required
Tax-Free
Loan proceeds generally
Stay
In your home for life

Payment Options

Lump Sum

Receive all proceeds at closing in one payment

Monthly Payments

Fixed monthly payments for life or specified term

Line of Credit

Draw funds as needed, unused portion grows over time

Combination

Mix of monthly payments and line of credit

Eligible Properties

Single-family homes
2-4 unit properties (owner-occupied)
HUD-approved condominiums
Manufactured homes (meeting FHA requirements)

HECM Requirements

Age
62+ years
Occupancy
Primary residence
Equity
Substantial equity
Counseling
HUD required

How Much Can You Borrow?

The amount you can borrow depends on several factors including your age, home value, and current interest rates.

Age Factor
Older = More

Older borrowers can access more equity

Home Value
$1.09M

2024 FHA lending limit

Interest Rates
Lower = More

Lower rates mean higher loan amounts

Reverse Mortgage Pros and Cons

Advantages

  • No monthly mortgage payments
  • Stay in your home for life
  • Loan proceeds are generally tax-free
  • FHA insurance protections
  • Flexible payment options
  • Non-recourse loan protection

Considerations

  • Reduces inheritance for heirs
  • High upfront costs and fees
  • Interest compounds over time
  • Must maintain property and pay taxes/insurance
  • May affect eligibility for some benefits
  • Complex product requiring careful consideration

Important Considerations

Required Counseling

HUD requires all borrowers to complete counseling with an approved agency before applying for a reverse mortgage.

Ongoing Obligations

You must continue to pay property taxes, homeowners insurance, and maintain the property.