Reverse Mortgages for Successful Aging: A Clear Guide for Homeowners 62+

If most of your savings are tied up in your home, a reverse mortgage can turn part of that equity into cash without requiring monthly mortgage payments. With a Home Equity Conversion Mortgage (HECM), the most common reverse mortgage in the U.S., you keep ownership and title, live in your home, and receive funds as a line of credit, monthly payments, a lump sum, or a mix of these options. Interest and mortgage insurance premiums accrue over time and are repaid when you sell the home, move out, or pass away.
Senior woman considering whether a reverse mortgage is the right option for her situation.

Is a Reverse Mortgage Right for You?

A reverse mortgage may fit if you:
  • Are 62 or older and want to age in place
  • Need extra income to cover living costs, healthcare, or home maintenance
  • Want to pay off an existing mortgage to eliminate monthly payments
  • Prefer a flexible line of credit that can grow over time
  • Are comfortable with your home equity decreasing as you use the funds

How a HECM Works

  • You stay on the title. The lender places a lien, similar to a traditional mortgage.
  • No required monthly mortgage payments. You must pay property taxes, homeowners insurance, HOA fees if applicable, and maintain the home.
  • Non‑recourse protection. You or your heirs will never owe more than the home’s value when the loan is repaid, even if the loan balance grows beyond it.
  • Repayment. The loan becomes due when you sell, move out permanently, or pass away. Heirs can sell the home, walk away, or buy it (often for 95% of the appraised value or the balance owed, whichever is less, under current HECM rules).
Financial advisor explaining the mechanics of a HECM reverse mortgage to a senior homeowner.

Eligibility Checklist

  • Age 62 or older (youngest borrower on the title)
  • Primary residence (single‑family, 2–4 unit with one unit occupied by you, FHA‑approved condo, certain manufactured homes)
  • Sufficient home equity; HECM must be in first lien position (existing mortgages are paid off at closing)
  • Ability to meet ongoing obligations (property taxes, insurance, maintenance). A financial assessment is required and may lead to a set‑aside for future taxes/insurance if needed
  • HUD‑approved counseling completed before application

Your Payout Options

  • Line of Credit: Flexible withdrawals; available credit can grow over time
  • Monthly Payments:
    • Tenure: For as long as you live in the home as your primary residence and meet loan obligations
    • Term: For a set number of months
  • Lump Sum: Typically at a fixed rate with initial disbursement limits
  • Combination: Mix the above to match your needs
Senior couple using reverse mortgage funds to improve and renovate their home.

Common Uses

  • Eliminate current mortgage payments
  • Cover everyday expenses and rising healthcare costs
  • Fund in‑home care or long‑term care insurance premiums
  • Pay for home repairs, accessibility upgrades, or remodels
  • Create an emergency fund via a line of credit
  • Support travel, family gifting, or legacy planning after consulting advisors

Costs and Fees

  • Typical closing costs: origination fee, appraisal, title and recording, FHA mortgage insurance premiums (initial and annual), and standard closing fees
  • Most costs are financed into the loan; out‑of‑pocket costs are usually limited to the appraisal and counseling fee, where applicable
  • No prepayment penalty. You can repay at any time to reduce interest accrual
Senior man reviewing reverse mortgage closing costs and fee documents at home.

Safeguards and Risks to Consider

  • Safeguards:
    • Non‑recourse feature protects you and your heirs
    • Mandatory third‑party counseling to review pros and cons
    • Line‑of‑credit growth can enhance long‑term access to funds
  • Risks:
    • Your loan balance grows over time, reducing home equity
    • You must stay current on taxes, insurance, HOA dues, and maintenance or the loan can default
    • Variable rates can affect the pace of balance growth for adjustable‑rate loans
    • Moving out earlier than expected may reduce the value you get from the loan

What Happens When You Leave the Home

  • Sale of the home typically repays the loan
  • Any remaining equity goes to you or your heirs
  • Heirs may:
    • Sell the home and keep the remaining equity
    • Keep the home by paying the lesser of the balance owed or a defined percentage of the appraised value (subject to HECM rules)
    • Walk away with no personal liability beyond the home’s value

Taxes and Benefits

  • Loan proceeds are generally not taxable because they are loan advances, not income. Consult a tax professional for your situation
  • Mortgage interest is typically deductible only when paid, subject to IRS rules and limits
  • Medicaid and other needs‑based benefits:
    • Funds left in a HECM line of credit are generally not counted as an asset until drawn
    • Once withdrawn and held in a bank or investment account, funds may count toward asset/resource limits
    • Rules vary by state; consult an elder law attorney or benefits specialist

Taxes and Benefits

  • Loan proceeds are generally not taxable because they are loan advances, not income. Consult a tax professional for your situation
  • Mortgage interest is typically deductible only when paid, subject to IRS rules and limits
  • Medicaid and other needs‑based benefits:
    • Funds left in a HECM line of credit are generally not counted as an asset until drawn
    • Once withdrawn and held in a bank or investment account, funds may count toward asset/resource limits
    • Rules vary by state; consult an elder law attorney or benefits specialist

Frequently Asked Questions

Do I keep ownership of my home?
Yes. You keep the title. The lender holds a lien, just like a traditional mortgage.
Can I lose my home?
You must live in the home as your primary residence, keep it in good repair, and pay taxes, insurance, and HOA dues. Failure to meet these obligations can lead to default.
Do my heirs owe the lender?
No personal liability beyond the home’s value. Heirs can sell, keep, or walk away.
How much can I get?
It depends on your age (or the youngest borrower’s age), home value (up to FHA’s lending limit, updated annually), interest rates, and payout option. Request a personalized estimate.
Fixed or adjustable rate?
Lump‑sum advances are typically fixed rate with limits on first‑year draws. Lines of credit and monthly payments are typically adjustable with the potential for line‑of‑credit growth.
Will counseling cost me?
HUD‑approved counseling is required. Counselors may charge a modest fee; fee waivers may be available based on need.

How To Get Started

Check Eligibility (2 minutes)

Confirm age 62+, primary residence, and ability to handle taxes, insurance, and upkeep

Get a Personalized Estimate

See projected funds, costs, and payout options

Complete HUD Counseling

Independent session to review all alternatives

Appraisal and Underwriting

Verify home value, complete financial assessment

Close and Access Funds

Choose lump sum, monthly payments, line of credit, or a combination
Senior woman finalizing her reverse mortgage paperwork with assistance from a financial advisor.

Helpful Documents to Gather

  • Photo ID and proof of age
  • Recent mortgage statement (if any)
  • Homeowners insurance declaration page
  • Property tax bill and HOA statement (if applicable)
  • Social Security, pension, or other income proof
  • Recent bank statements

Ready To Explore Your Options?

  • Check your eligibility now
  • Get a free, no‑obligation quote
  • Speak with a HUD‑approved counselor
  • Schedule a 15‑minute call with a reverse mortgage specialist

Important Notes

  • Reverse mortgages are loans secured by your home. Interest and mortgage insurance premiums accrue over time
  • Program rules, lending limits, and fees change periodically
  • Always consult a HUD‑approved counselor, tax professional, and, if applicable, an elder law attorney before making decisions