Reverse Mortgage Loans
Reverse Mortgage (HECM & Proprietary Programs) For eligible homeowners, a reverse mortgage converts part of your home equity into cash without required monthly mortgage payments. You keep title and must continue to pay property taxes, homeowners insurance, HOA dues (if any), and maintain the home.
Advantages
-
No required monthly mortgage payment — you can make voluntary payments anytime; the loan is due when you sell, move, or no longer meet program terms.
-
Multiple ways to receive funds — lump sum, monthly payments (tenure or term), a line of credit, or a combination.
-
Line of credit growth (HECM) — unused credit can increase over time under program rules.
-
Stay in your home — access equity while aging in place.
-
Non-recourse protection — you or your heirs never owe more than the home’s value at sale.
-
Tax flexibility — advances are generally not taxable income (consult a tax advisor).
Downpayment Requirements
-
Home Equity Conversion Mortgage (HECM)
-
1. No down payment required if you already own your home outright. If you’re paying off an existing mortgage, a portion of the loan proceeds may go toward paying it off.
-
2. Proprietary Reverse Mortgages - Usually no down payment, but may have higher fees or requirements depending on lender and home value.
-
3. Single-Purpose Reverse Mortgage - Typically no down payment, as they are designed for specific uses like home repairs or improvements.
Eligibility Requirements
-
Age 62+ for FHA HECM (some proprietary programs may allow lower minimum ages)
-
Primary residence (single-family, select condos, some 2–4 unit properties)
-
Sufficient equity and ability to meet ongoing property charges
-
HUD-approved counseling required for HECM
Reverse Mortgage Loan FAQ's
What is a Reverse Mortgage?
A reverse mortgage is a loan for homeowners aged 62 and older that allows them to convert home equity into cash without selling their home or making monthly mortgage payments.
-
The loan balance increases over time as interest and fees accrue.
-
Repayment is usually due when the homeowner sells the home, moves out permanently, or passes away.
What are the types of Reverse
Mortgages?
Home Equity Conversion Mortgage (HECM)
-
Government-insured, most common
-
Can be used for any purpose
-
Flexible payout options: lump sum, monthly payments, line of credit
Proprietary Reverse Mortgage
-
Private loans for higher-value homes
-
May allow larger loan amounts than HECM
Single-Purpose Reverse Mortgage
-
Offered by some state or local agencies
-
Funds must be used for specific purposes (e.g., home repairs, property taxes)
Why is counseling required for reverse mortgages?
-
Protects Borrowers - Reverse mortgages are complex and can impact home equity and inheritance. Counseling ensures borrowers understand the risks and responsibilities.
-
Ensures Informed Decisions - Borrowers learn how the loan works, including fees, interest accrual, and repayment rules. Counseling covers alternative options, like downsizing or a home equity loan.
-
Reduces Default Risk - Borrowers must maintain taxes, insurance, and home upkeep. Counseling helps them plan financially to avoid losing their home.
-
Regulatory Requirement - HUD mandates counseling for HECM reverse mortgages to comply with federal protections. Borrowers receive a certificate of counseling, required to close the loan.
REVERSE MORTGAGE LOANS PROS AND CONS
PROS
-
Provides cash flow without monthly payments
-
Homeowners can stay in their home
-
Flexible payout options
-
Can help with living expenses, healthcare, or home improvements
CONS
-
Interest and fees accumulate, reducing home equity over time
-
Less inheritance for heirs
-
Must maintain the home, pay property taxes and insurance
-
Loan balance can grow quickly if payments are taken over many years
Get A Quick Quote
Like what you see? Get in touch to learn more.