Frequently Asked Questions about Reverse Mortgages



Most common questions about reverse mortgages
The Home Equity Conversion Mortgage (HECM) is FHA's reverse mortgage program, which enables you to withdraw some of the equity in your home. The HECM is a safe plan that can give older Americans greater financial security. Many seniors use it to supplement Social Security, meet unexpected medical expenses, make home improvements and more.

What is a Reverse Mortgage?

A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you built up over the years of making mortgage payments can be paid to you. However, unlike traditional home equity loans or second mortgages, HECM borrowers do not have to repay the HECM loan until the borrowers no longer use the home as their principal residence.

Can I Qualify for FHA's HECM Reverse Mortgage?

To be eligible for an FHA HECM, the FHA requires that you be 62 years of age or older, own your home outright, or have a somewhat low mortgage balance that can be paid off at closing with proceeds from the reverse loan, and you must live in the home.

Can I apply for a HECM reverse mortgage even if my current loan is not an FHA loan?

Yes. You may apply for a HECM regardless of whether or not you have an FHA loan.

What Types of Homes are Eligible?

To be eligible for the FHA HECM, your home must be a single family home or a 2-4 unit home with one unit occupied by the borrower. HUD- approved condominiums and manufactured homes that meet FHA requirements are also eligible.

What are the differences between a reverse mortgage and a home equity loan?

With a second mortgage, or home equity line of credit, borrowers must have adequate income to qualify for the loan, and they make monthly payments on the principal and interest payments. A reverse mortgage is different, because it pays you- there are no monthly principal and interest payments. With a reverse mortgage, you are required to pay real estate taxes, utilities, and hazard and flood insurance premiums.

Will we Have an Estate that we can Leave to our Heirs?

When the home is sold or no longer used as a primary residence, the cash and interest must be repaid. All proceeds beyond the amount owed belong to your spouse or estate. This means any remaining equity can be transferred to heirs. No debt is passed along to the estate or heirs.


How Much Money can I Get From my Home?

The amount you may borrow will depend on:
  • Age of the youngest borrower
  • Current interest rate
  • Lesser of appraised value or the HECM FHA mortgage limit of $625,500
In addition, the more valuable your home is, the older you are, the more you can borrow.

As you age, instead of just considering moving in with relatives, or a nursing home, learn how you can use a reverse mortgage to stay at home.