Specialized home loans for homeowners 62 and older that convert home equity into cash with no monthly mortgage payments required.
Reverse mortgages offer numerous advantages for homeowners age 62 and older looking to access their home equity without selling their home or taking on monthly mortgage payments.
Eliminate your monthly mortgage payments for as long as you live in your home. This frees up cash flow that can be used for healthcare, daily expenses, home improvements, or other retirement needs. You're still responsible for property taxes, homeowners insurance, and home maintenance.
You retain full title and ownership of your home with a reverse mortgage. You can live in your home as long as you wish, provided you continue to pay property taxes, insurance, and maintain the home according to FHA requirements. The home remains yours, not the lender's.
The funds you receive are considered loan advances, not income, making them tax-free. This can provide significant financial advantages compared to taxable retirement account withdrawals. However, it's important to consult with a tax professional regarding your specific financial situation.
HECM reverse mortgages are insured by the Federal Housing Administration, providing important safeguards for borrowers. This insurance guarantees you'll receive promised loan advances and ensures you'll never owe more than the home's value when the loan becomes due.
Choose how to receive your funds based on your financial needs: a lump sum at closing, monthly payments for a set term or life, a line of credit that grows over time, or a combination of these options. The line of credit option provides a growing reserve you can tap as needed.
A reverse mortgage is a non-recourse loan, meaning neither you nor your heirs will ever owe more than the home's value when the loan is repaid, even if the loan balance exceeds the home's value. This protection applies regardless of how much you borrow or how long you have the loan.
To qualify for a reverse mortgage, you'll need to meet these general eligibility requirements.
All borrowers must be 62 years of age or older.
Non-borrowing spouses may be younger than 62 and still receive certain protections.
The home must be your primary residence where you live for the majority of the year.
You must continue to live in the home for the loan to remain in effect.
You must own your home outright or have a low mortgage balance that can be paid off with the reverse mortgage proceeds.
Higher equity means you can receive more funds from the reverse mortgage.
Completion of a HUD-approved reverse mortgage counseling session is required.
This ensures you fully understand the loan and its implications for you and your heirs.
Demonstration of willingness and ability to pay property taxes, insurance, and maintain the home.
In some cases, a Life Expectancy Set-Aside (LESA) may be required to ensure these obligations are met.
Single-family homes, 2-4 unit properties, FHA-approved condominiums, and manufactured homes that meet FHA requirements.
Some property types may have additional eligibility criteria.
Understanding the steps involved in obtaining a reverse mortgage can help you prepare and set expectations.
Learn about reverse mortgages and complete required HUD-approved counseling with an independent third-party counselor who will explain the costs, financial implications, and alternatives.
Complete the loan application and undergo a financial assessment where the lender reviews your credit history, income, and monthly obligations to ensure you can meet property charges and maintenance requirements.
A FHA-approved appraiser determines your home's value, which helps establish how much you can borrow. The appraisal also confirms your home meets FHA property standards.
The lender's underwriting team reviews your application, financial assessment, and appraisal to make a final decision on your loan approval and amount.
Sign final loan documents with a notary or attorney present. There's a three-day right of rescission period during which you can cancel the loan without penalty if you change your mind.
After the rescission period, the lender pays off any existing mortgage and disburses funds according to your chosen payment plan: lump sum, monthly payments, line of credit, or a combination.
Compare reverse mortgages with other financial options to determine which best meets your retirement needs.
| Feature | Reverse Mortgage | Home Equity Loan | Cash-Out Refinance | Selling Home |
|---|---|---|---|---|
| Monthly Payment | No payments required | Monthly payments required | Monthly payments required | No payments |
| Credit Requirements | Less stringent | Good credit required | Good credit required | No credit check |
| Income Requirements | Financial assessment only | Income verification required | Income verification required | No income verification |
| Stay in Home | Yes, for life | Yes, if payments made | Yes, if payments made | No, must relocate |
| Repayment Timing | When no longer in home | Immediate monthly payments | Immediate monthly payments | No repayment |
| Impact on Heirs | Repay loan or 95% of home value | Inherit home with remaining debt | Inherit home with remaining debt | No home to inherit |
Real stories from seniors who have improved their retirement with a reverse mortgage.
The reverse mortgage eliminated our monthly mortgage payment and freed up $1,200 every month. This has allowed us to stay in our home of 30 years and cover rising healthcare costs without worrying about making ends meet.
After my husband passed away, I was concerned about managing on a reduced income. The reverse mortgage line of credit has been my safety net, giving me peace of mind knowing I have access to funds when unexpected expenses arise.
We used our reverse mortgage to pay off high-interest credit card debt and make modifications to our home to accommodate my mobility issues. The monthly term payments provide additional income that helps us enjoy our retirement years.
Get answers to common questions about reverse mortgages.
A reverse mortgage allows homeowners age 62+ to convert home equity into cash without selling the home or making monthly mortgage payments. The loan is repaid when the last borrower no longer lives in the home. You can receive funds as a lump sum, monthly payments, a line of credit, or a combination of these options. Interest accrues only on the funds you use, and the loan balance grows over time as interest is added to the amount borrowed.
When the last borrower passes away, heirs have several options: They can pay off the loan and keep the home (by paying the lesser of the loan balance or 95% of the current appraised value); they can sell the home and use the proceeds to pay off the loan (keeping any excess proceeds); or they can give the home to the lender through a deed in lieu of foreclosure. If the loan balance exceeds the home's value, FHA insurance covers the difference, and neither the borrower's estate nor heirs are responsible for the shortfall.
The amount you can borrow, called the "principal limit," depends on several factors: the age of the youngest borrower or eligible non-borrowing spouse (older borrowers can borrow more); current interest rates (lower rates allow higher loan amounts); and your home's appraised value (up to the FHA lending limit of $1,089,300 as of 2023). Typically, borrowers can access between 40-60% of their home's appraised value.
Reverse mortgage costs include: an FHA mortgage insurance premium (2% of the home's appraised value upfront and 0.5% annually); origination fees (capped at $6,000); third-party closing costs for services like appraisals, title searches, and recording fees; and interest that accrues on the loan balance. Most costs can be financed as part of the loan, reducing out-of-pocket expenses.
Reverse mortgage proceeds generally do not affect Social Security or Medicare benefits because these funds are considered loan advances, not income. However, needs-based benefits like Medicaid or Supplemental Security Income (SSI) could be affected if you keep loan proceeds in your bank account past the month you receive them, as these programs have asset limits. Consult with a benefits specialist before taking a reverse mortgage if you receive needs-based benefits.
You can keep your home with a reverse mortgage as long as you comply with the loan terms, which include: living in the home as your primary residence; keeping the property maintained according to FHA standards; and staying current on property-related expenses like taxes, insurance, and homeowners association fees. If these obligations aren't met, the loan could become due and payable, potentially leading to foreclosure. Lenders must perform a financial assessment to ensure borrowers can meet these obligations.
Complete the form below to learn more about how a reverse mortgage can enhance your retirement. A reverse mortgage specialist will contact you shortly.
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For information purposes only. This is not a commitment to lend or extend credit. Information and/or dates are subject to change without notice. All loans are subject to credit approval. E Mortgage Capital, Inc. d/b/a E Mortgage Capital, NMLS# 1416824. Equal Housing Lender (NMLS consumer access: https://www.nmlsconsumeraccess.org/_)
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A toll-free consumer hotline is available at 1-877-276-5550. The department maintains a recovery fund to make payments of certain actual out of pocket damages sustained by borrowers caused by acts of licensed mortgage banker residential mortgage loan originators. A written application for reimbursement from the recovery fund must be filed with and investigated by the department prior to the payment of a claim. For more information about the recovery fund, please consult the department’s website at