Reverse mortgage FAQ.
Plain-language answers to the questions we hear most. If yours isn't here, the personalized options form is a good place to ask.
The basics
What is a reverse mortgage?
A reverse mortgage is a loan available to homeowners 62 and older that lets you convert part of your home's equity into cash, monthly payments, a line of credit, or some combination of those — without selling the home or making required monthly mortgage payments. You remain the owner of the home, and the loan is generally repaid when you sell it, move out permanently, or pass away.
Who qualifies for a reverse mortgage?
For the most common reverse mortgage — the FHA-insured HECM — the youngest borrower on the title must be at least 62 years old. The home must be your primary residence, and it must be a single-family home, an FHA-approved condo, a manufactured home that meets FHA requirements, or a 2–4 unit property where you occupy one unit. You also need to demonstrate the financial ability to keep up with property taxes, homeowner's insurance, and basic maintenance.
How does a reverse mortgage actually work?
Instead of making payments to a lender each month, the lender effectively makes funds available to you — drawn from your home's equity. Interest accrues on the balance over time. You don't pay it back until a "maturity event" occurs (you sell the home, move out for 12+ months, or pass away). At that point, the home is sold or the loan is refinanced, and the proceeds repay the loan. Any remaining equity belongs to you or your heirs.
What types of reverse mortgages exist?
There are three main types. The Home Equity Conversion Mortgage (HECM) is FHA-insured and the most common — it has federal protections and standardized rules. Proprietary reverse mortgages are offered by private lenders, often for higher-value homes that exceed FHA limits; some start at age 55 in certain states, and some are second-lien loans that let you keep your current mortgage. Single-purpose reverse mortgages are smaller loans offered by some state and local governments or nonprofits for specific uses like property taxes or home repairs.
Can I get a reverse mortgage and keep my current mortgage?
With a HECM, no: any existing mortgage is paid off as part of the loan, which is why many people use one to eliminate a monthly mortgage payment. If you'd rather keep your current mortgage, for example because it has a low interest rate, some private lenders offer a second-lien reverse mortgage. It sits behind your existing mortgage and requires no monthly payment on the new loan, but you keep making your regular first-mortgage payments, along with property taxes, insurance, and upkeep. These programs aren't FHA-insured, are available only in some states, and some start at age 55.
Money questions
How much can I borrow with a reverse mortgage?
The amount depends primarily on three things: the age of the youngest borrower (older borrowers can access more), your home's appraised value (capped at the FHA lending limit for HECMs), and current interest rates. As a rough range, borrowers in their 60s typically access 40–55% of home value, while borrowers in their 80s can access 60–75%. Your existing mortgage balance must be paid off at closing from the proceeds.
What does a reverse mortgage cost?
Reverse mortgages have several costs: an FHA mortgage insurance premium (2% of the home value upfront, then 0.5% annually on the loan balance), an origination fee (capped by FHA), a third-party closing cost package (appraisal, title, recording, etc.), and ongoing servicing. Most of these costs are rolled into the loan rather than paid out of pocket. Total upfront costs typically run 4–6% of the home value, which is meaningful — it's worth comparing to other options.
How can I receive the money?
You can take the proceeds as a one-time lump sum at closing, as fixed monthly payments for life (tenure) or for a set term, as a line of credit you draw on as needed, or as some combination. The line of credit option has a notable feature: any unused portion of the credit line grows over time at the same rate as the loan, which can be a powerful long-term planning tool.
Is reverse mortgage money taxable income?
No. Funds received from a reverse mortgage are loan proceeds, not income, so they aren't subject to federal income tax. They also generally don't count as income for Social Security or Medicare eligibility purposes. Always confirm with a qualified tax advisor for your specific situation.
Will a reverse mortgage affect my Social Security or Medicare?
No, neither Social Security nor Medicare is needs-based, so a reverse mortgage doesn't affect those benefits. However, needs-based programs like Medicaid and Supplemental Security Income (SSI) can be affected — if you receive a large lump sum and hold it past the end of the month, the funds may count as an asset. A financial advisor familiar with these programs can help plan around this.
Your home and your family
Do I still own my home with a reverse mortgage?
Yes. You remain the owner of your home throughout the life of the loan, just as you do with a traditional mortgage. The lender places a lien on the property to secure the loan, but the title stays in your name. You decide when to sell, when to move, and what to leave to your heirs.
What happens to my reverse mortgage when I pass away?
When the last surviving borrower passes away or moves out permanently, the loan becomes due. The home is typically sold, the loan is paid off from the sale proceeds, and any remaining equity passes to your heirs. Heirs also have the option to keep the home by paying off the loan balance (or 95% of the appraised value, whichever is less) — often by refinancing into a traditional mortgage in their own name.
Can my spouse stay in the home if I die?
If your spouse is a co-borrower on the loan, yes — they can continue to live in the home with no changes to the reverse mortgage. If your spouse is not on the loan (a "non-borrowing spouse"), federal protections for HECMs now generally allow eligible non-borrowing spouses to remain in the home, provided certain conditions are met. This is one of the most important areas to confirm before signing — make sure both spouses understand their status.
Will my children inherit a debt from this loan?
No. Reverse mortgages (HECMs and most proprietary programs) are non-recourse loans, meaning your heirs are never required to pay more than the home is worth at the time of repayment. If the home sells for less than the loan balance, FHA insurance covers the difference — not your family. If there is remaining equity, it goes to your heirs.
Can I still leave my home to my heirs?
Yes. Your heirs inherit the home along with the loan balance. They can sell the home and keep any remaining equity, refinance the loan into a traditional mortgage in their own name and keep the home, or simply walk away by handing the property over to the lender (a deed in lieu of foreclosure) without any further obligation.
What if I want to sell my home or move?
You can sell the home at any time. The reverse mortgage is paid off from the sale proceeds, and any remaining equity is yours. If you want to move into a different home, you can use a HECM for Purchase to buy the new home with a reverse mortgage, or simply pay off the existing reverse mortgage and downsize the traditional way.
Common concerns
Can the bank take my home with a reverse mortgage?
Not as long as you meet your obligations. The home stays in your name, and the loan doesn't become due until you sell, move out for more than 12 months, or pass away. Where people get into trouble is failing to pay property taxes, homeowner's insurance, or basic maintenance — those are required, and falling behind can trigger default. Stay current on those, and the home is yours.
What happens if my home value drops below what I owe?
Because reverse mortgages are non-recourse loans, you (or your heirs) are never required to pay more than the home is worth at the time of repayment. If the loan balance exceeds the home's value, FHA insurance covers the shortfall. The lender absorbs the loss — not you, and not your family.
Are reverse mortgages a scam?
No. The HECM program is administered by the Federal Housing Administration (FHA) and regulated by the Department of Housing and Urban Development (HUD). Federal law requires every HECM borrower to complete one-on-one counseling with an independent HUD-approved counselor before any paperwork is signed. That said, the broader reverse mortgage market does attract bad actors — high-pressure sales tactics and misleading advertising do happen. The protections exist; choosing a reputable, transparent originator matters.
What if I can't pay my property taxes or insurance?
This is a real risk, because keeping current on taxes, insurance, and maintenance is part of the loan terms. If you anticipate trouble covering these, a Life Expectancy Set-Aside (LESA) can be required at closing — funds set aside from your loan proceeds specifically to pay taxes and insurance over the expected life of the loan. It reduces the cash available to you upfront but protects you from defaulting later.
The process
What is HUD-approved counseling and why is it required?
Before closing on a HECM, federal law requires you to meet one-on-one (in person or by phone) with a counselor approved by HUD. The counseling is independent of any lender. The counselor walks you through how reverse mortgages work, alternatives to consider, the costs involved, and the responsibilities you'd be taking on. It typically takes about 90 minutes and costs around $125 (sometimes waived for borrowers with limited income).
How long does a reverse mortgage take to close?
From application to closing, a typical reverse mortgage takes 30–45 days. The process includes counseling, application, appraisal, underwriting, title work, and closing. Complex situations (estate planning issues, multiple borrowers, non-borrowing spouses, condo certifications) can take longer.
Can I change my mind after signing?
Yes. Federal law gives you a three-business-day right to rescind on a HECM after closing. During that window, you can cancel the loan with no cost. After the rescission period ends, the loan is final — though you can always pay it off later by selling the home, refinancing, or paying it down voluntarily.
If your question isn't covered here, the personalized options form is the best place to ask — describe your situation and we'll get back to you with answers specific to it.
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