Secure your retirement with a reverse mortgage. Learn how!

Reverse Mortgage (HECM) Loans

What is a Reverse Mortgage (HECM)?

A Home Equity Conversion Mortgage (HECM), commonly called a reverse mortgage, is a government-insured loan available to homeowners aged 62 and older. Instead of making monthly mortgage payments, borrowers can access their home’s equity in the form of tax-free proceeds. The loan is repaid when the homeowner sells the home, permanently moves out, or passes away. The homeowner retains title and ownership as long as they meet the loan obligations.

Benefits of a Reverse Mortgage

• No monthly mortgage payments required
• Access cash through lump sum, monthly payments, or line of credit
• Line of credit option grows over time, increasing available funds
• Can help supplement retirement income or cover unexpected expenses
• Borrowers remain the legal owners of their homes

Who Should Consider a Reverse Mortgage?

• Retirees needing supplemental income or liquidity
• Homeowners who want to age in place without selling their home
• Individuals with significant home equity but limited retirement savings
• Borrowers seeking to delay Social Security or preserve investment accounts

Eligibility

• At least one borrower must be 62 years or older
• Must live in the property as the primary residence
• Sufficient equity in the home (usually at least 50%)
• Property must meet FHA standards and be the borrower’s principal residence
• Mandatory HUD-approved reverse mortgage counseling

Is It Right for You?

A HECM reverse mortgage is often best for homeowners who plan to stay in their home long-term and want to use their equity to enhance retirement. It may not be the right choice for those planning to move in the near future or leave the home as a primary inheritance.

Key Requirements

• Continue to pay property taxes, homeowner’s insurance, and HOA dues (if applicable)
• Maintain the property in good condition
• Complete HUD-approved counseling before closing
• The home must be a single-family home, a 2–4 unit property (with one unit occupied by the borrower), or an FHA-approved condo

Types of Income Used

Traditional income is not required to qualify for a reverse mortgage. Instead, lenders assess:

• Residual income to ensure ongoing property obligations can be met
• Credit history to verify willingness to meet financial obligations

Documents Needed

• Proof of age (driver’s license, passport, or birth certificate)
• Property deed and mortgage statement (if applicable)
• Homeowner’s insurance policy
• Bank statements and credit report
• Proof of income (Social Security, pensions, retirement accounts, etc.)

Advantages Over Other Loan Types

• No required monthly mortgage payments
• Can improve retirement cash flow without selling the home
• Flexible payout options (lump sum, monthly income, or line of credit)
• Non-recourse loan: borrowers or heirs never owe more than the home’s value at sale

Considerations

• Borrowers must continue paying taxes, insurance, and upkeep
• Loan balance increases over time as interest accrues
• Can reduce equity left for heirs
• Upfront costs (closing costs and FHA mortgage insurance premiums) can be higher than traditional loans

FAQ

Q: Do I still own my home with a reverse mortgage?
A: Yes, you remain the owner and keep title to the home, provided you meet the loan obligations.

Q: Do I still pay property taxes and insurance?
A: Yes, you must continue paying property taxes, homeowner’s insurance, and maintain the home.

Q: What happens if I move or pass away?
A: The loan becomes due and payable. Typically, the home is sold, and any remaining equity belongs to you or your heirs.

Q: Can I outlive my reverse mortgage?
A: No, as long as you meet the loan obligations and live in the home as your primary residence, the reverse mortgage remains in effect.