Reverse Mortgage Basics
A reverse mortgage is a loan secured by your home that converts equity into cash. Unlike a traditional mortgage, you make no monthly payments — instead, interest accumulates and the balance grows over time. The loan becomes due when the home is sold, you permanently move out, or you pass away. You (or your heirs) repay the loan from the home sale proceeds.
Must be 62 years or older. Must own your home (or have substantial equity — at least 50% recommended). Home must be your primary residence. Must complete HUD-approved counseling session before closing. Property must meet FHA standards. If you have an existing mortgage, it can often be paid off with reverse mortgage proceeds.
The amount depends on: your age (older = more available equity), home value (up to $1,149,825 HECM lending limit in 2026), interest rates (lower rates = more available equity), and your existing mortgage balance (must be paid off). At age 62, you can typically access 40–50% of your home's value; at 75, approximately 55–65%.
Reverse Mortgage Payout Options
| Payout Type | How It Works | Best For |
|---|---|---|
| Lump sum | Receive full proceeds at closing (fixed rate) | Paying off mortgage, large one-time expense |
| Monthly payments (tenure) | Fixed monthly payment for life | Supplementing retirement income |
| Monthly payments (term) | Fixed monthly payment for set period | Specific expense period |
| Line of credit | Draw as needed; unused credit grows over time | Flexibility, emergency fund |
| Combination | Mix of above options | Multiple needs |
When Does a Reverse Mortgage Come Due?
- You sell the home
- All borrowers permanently move out (including moving to a nursing facility for 12+ consecutive months)
- All borrowers pass away
- You fail to pay property taxes or homeowners insurance
- You fail to maintain the property to FHA standards
Frequently Asked Questions
Yes — you retain title to your home throughout the reverse mortgage. The lender has a lien on the property (as with any mortgage), but you own the home. You must continue paying property taxes, homeowners insurance, and maintaining the property — failure to do so can trigger default and foreclosure.
When you pass away, your heirs have options: (1) repay the reverse mortgage loan balance and keep the home, (2) sell the home, use proceeds to repay the loan, and keep the remainder, or (3) walk away — the lender takes the home. Reverse mortgages are non-recourse loans — your heirs never owe more than the home's market value, even if the loan balance exceeds it.