$50,000 to $10 million loans

Reverse mortgages are available to homeowners aged 62 and older, allowing them to convert a portion of their home equity into cash. Unlike a traditional mortgage, where the homeowner makes monthly payments to the lender, with a reverse mortgage, the lender makes payments to the homeowner.

What to know about reverse mortgages

A reverse mortgage offers homeowners 62 and older a way to access their home equity for extra income or expenses without having to make monthly payments. This can provide much-needed financial flexibility in retirement, allowing seniors to cover unexpected costs, supplement their income, or simply enjoy a more comfortable lifestyle. Importantly, a reverse mortgage allows seniors to access these funds while staying in their homes, retaining ownership and avoiding the disruption of a move.

Types of reverse mortgages

• Home equity conversion mortgage (HECM) - The most common type, insured by the Federal Housing Administration (FHA).
• Proprietary reverse mortgages - Private loans not backed by the government, usually for higher-value homes.
• Single-purpose reverse mortgages - Offered by some state and local government agencies or nonprofit organizations, intended for specific purposes like home repairs or property taxes.

Loan amount

• The amount you can borrow depends on your age, home value, and current interest rates.

Payment options

• Lump sum - A single large payment.
• Monthly payments - Regular disbursements over a set period or as long as the homeowner lives in the home.
• Line of credit - Funds can be drawn as needed.
• Combination - A mix of the above options.

Loan repayment

• The loan does not need to be repaid until the homeowner sells the home, moves out permanently, or passes away.
• The home is typically sold to repay the loan, with any remaining equity going to the homeowner or their heirs.
• If the loan balance exceeds the home's value, FHA insurance covers the difference, ensuring that neither the homeowner nor their heirs are liable for the excess amount.

Eligibility

• Homeowners must be at least 62 years old.
• The home must be the primary residence.
• The homeowner must have significant equity in the home.

Counseling requirement

• Before obtaining a reverse mortgage, homeowners must receive counseling from a HUD-approved agency. This ensures they understand the loan terms and alternatives.