Frequently Asked Questions

A reverse mortgage is a loan available to homeowners age 62 and older that allows them to convert part of their home equity into cash. Unlike a traditional mortgage where you make monthly payments to the lender, with a reverse mortgage the lender pays you. The most common type is the HECM (Home Equity Conversion Mortgage), which is insured by the FHA. The loan is repaid when you sell the home, move out permanently, or pass away — typically from the proceeds of selling the home.

Yes. You retain full ownership and title to your home throughout the life of the loan. The reverse mortgage is simply a lien against the property — the same as a traditional mortgage. You continue to live in your home and make all decisions about it. However, you must continue to pay property taxes, homeowner's insurance, and maintain the home in good condition as conditions of the loan.

To qualify for a HECM reverse mortgage, you must be at least 62 years old, own your home outright or have a low remaining mortgage balance (which can be paid off with reverse mortgage proceeds), live in the home as your primary residence, not be delinquent on any federal debt, and complete a counseling session with a HUD-approved counselor. You must also pass a financial assessment showing you can meet ongoing property obligations. Learn more about eligibility.

The amount you can borrow depends on several factors: your age (older borrowers qualify for more), your home's appraised value, current interest rates, and the type of reverse mortgage. Generally, you can access between 40% and 70% of your home's value. The HECM lending limit is currently $1,149,825 (2024). For homes worth more, proprietary (jumbo) reverse mortgages may be available with higher limits.

You have several options for receiving your reverse mortgage proceeds:

• Lump sum — One large payment at closing (fixed rate only)
• Monthly payments — Steady income for a set term or as long as you live in the home
• Line of credit — Draw funds as needed, and the unused portion grows over time
• Combination — Mix monthly payments with a line of credit

The line of credit option is the most popular because of its flexibility and the growth feature. Learn more about how it works.

No. Reverse mortgage proceeds are considered loan advances, not income, so they are generally not subject to income tax. This is one of the key advantages of a reverse mortgage over other income sources. However, tax laws are complex, so it's always wise to consult with a tax advisor about your specific situation.

When the last surviving borrower dies, sells the home, or moves out permanently (such as into a care facility for more than 12 months), the loan becomes due. At that point, your heirs have several options:

• Sell the home and keep any equity above the loan balance
• Refinance the reverse mortgage into a traditional mortgage to keep the home
• Pay off the loan with other funds to keep the home
• Walk away if the loan balance exceeds the home's value — with HECM loans, heirs are never responsible for the difference

Reverse mortgage costs are similar to traditional mortgages and include origination fees (up to $6,000), an upfront mortgage insurance premium (2% of home value for HECM), ongoing annual mortgage insurance (0.5%), closing costs (appraisal, title, recording), and interest that accrues on the loan balance. Most of these costs can be financed into the loan, so you typically don't need to pay them out of pocket. Learn about the pros and cons.

A reverse mortgage cannot be "called due" simply because your home value drops or the loan balance grows. However, you can face foreclosure if you fail to meet your loan obligations: paying property taxes on time, maintaining homeowner's insurance, keeping the home in reasonable repair, and continuing to live there as your primary residence. As long as you meet these obligations, you can stay in your home for life.

HECM reverse mortgages are "non-recourse" loans, meaning you (or your heirs) will never owe more than the home's fair market value at the time of sale, regardless of the loan balance. If the loan balance exceeds the home's value, FHA insurance covers the difference. This is one of the most important consumer protections built into the HECM program.

Reverse mortgage proceeds generally do not affect Social Security retirement benefits or Medicare, because these are entitlement programs not based on financial need. However, reverse mortgage funds may affect needs-based programs like Medicaid or Supplemental Security Income (SSI) if the money is not spent in the same month it's received. It's important to discuss this with a benefits counselor if you receive needs-based assistance.

Yes, for HECM loans. Before you can apply, you must complete a counseling session with an independent, HUD-approved housing counselor. This is a consumer protection designed to ensure you fully understand how reverse mortgages work, the costs involved, and the alternatives available. The session typically costs around $125 and can be done in person or by phone. The counselor does not work for any lender and has no financial interest in whether you proceed.