Reverse Mortgages and Home Loans in Arizona

Arizona has more than its share of people who chose where to retire on purpose. Some came for the sun, some for family, and some just got tired of shoveling. A lot of them own their homes outright, or close to it, and they want to know how to use that equity without leaving.

A reverse mortgage can help. In Arizona, though, I usually start with two questions before we run a single number: Where do you live most of the year? And is your home in an HOA?

The short version

• We help Arizona homeowners and buyers with reverse mortgages, purchases, refinances, home equity, and VA loans.
• Reverse mortgage options include the HECM, the HECM for Purchase, and proprietary (jumbo) programs where available.
• A reverse mortgage only works on your primary residence, the home you live in most of the year. That matters in a state full of part-year residents.
• Arizona's Senior Freeze locks your home's limited property value for three years if you're 65 or older and meet the income and residency rules. A reverse mortgage doesn't change who owns or lives in the home.
• Arizona is a community property state, which can affect who signs at closing.
• HOA dues are part of the deal. With a reverse mortgage, keeping them current is one of the loan terms.

Reverse mortgages in Arizona

There are no required monthly mortgage payments with a reverse mortgage. You must continue to pay property taxes and homeowners insurance, maintain the home, and meet the other loan terms.

Arizona homeowners use reverse mortgages to:

• Pay off an existing mortgage and free up monthly cash.
• Set up a line of credit for emergencies, care at home, or a down year in the market.
• Add monthly income.
• Buy a home that fits the next stage of life with a HECM for Purchase, like moving from out of state into a single-level home closer to family. We can generally close in 30 days or less, but we always follow the contract.

HECM

The FHA-insured HECM is the reverse mortgage most Arizona homeowners get. You must be 62 or older, live in the home as your primary residence, and have enough equity. It comes in fixed-rate and adjustable versions. How much you can access depends on the youngest borrower's age (or an eligible non-borrowing spouse's), current rates, and your home's value up to the national HECM limit. See How a Reverse Mortgage Works and Lending Limits.

On an adjustable HECM, the unused line of credit grows over time and can't be frozen by the lender as long as you meet the loan terms. See the standby line of credit strategy.

We don't charge a monthly servicing fee on our HECMs. Some proprietary programs do, and I'll point it out if one applies.

Jumbo (proprietary) reverse mortgages

If your home is worth well above the HECM limit, a jumbo program may open up more money. As a broker, we compare programs from several lenders, including Mutual of Omaha Secure Equity, Finance of America HomeSafe, Longbridge Platinum, Smartfi Choice, Nationwide Equities EquityPower, and MCM Holdings MCM Edge. Finance of America's HomeSafe Standard is approved in Arizona. Availability for the others varies and changes over time. See Proprietary (Jumbo) Reverse Mortgages.

Part-year residents: the question to answer first

A reverse mortgage is only for your primary residence. For a HECM, that generally means the home you live in for the majority of the year. You'll confirm it every year with an occupancy certification. See Why did I get an occupancy certification?

So if you split the year:

• If Arizona is home most of the year, your Arizona home can be the one with the reverse mortgage.
• If you spend most of the year somewhere else, the reverse mortgage generally belongs on that home instead, and the Arizona home is a second home.
• If you're thinking about moving to Arizona for good, a HECM for Purchase lets you buy here and make it your primary residence. You generally must move in within 60 days of closing.

Be honest with yourself about where you really live. It affects your taxes, your Senior Freeze, and your loan.

Arizona's senior property tax programs

Senior Property Valuation Protection (the Senior Freeze)

Arizona's Senior Property Valuation Protection lets qualifying homeowners lock the limited property value of their home for three years at a time. Generally:

• At least one owner must be 65 or older.
• The home must be your primary residence, occupied at least nine months of the year.
• You must have lived in the home for at least two years.
• Your combined income from all sources, taxable and not, must be under a limit set for one owner or for two or more owners.
• You reapply before the three years are up. The county assessor sends a reminder.

What it does and doesn't do: it freezes the value used to figure your taxes, not the taxes themselves. Tax rates can still change, and improvements you add later get added to the value. The freeze can end if you sell, the home is no longer your primary residence, or you don't renew.

How it works with a reverse mortgage: a reverse mortgage doesn't change who owns the home or who lives there, so it shouldn't affect the freeze on its own. Reverse mortgage money is a loan, not income, but ask your county assessor how they treat it on the application. Apply through your county assessor.

Property tax deferral

Arizona also has a property tax deferral for older homeowners, but it's narrow. Under state law, you generally must be at least 70, meet residency rules, own no other real property, and have very limited household income. Few people qualify. If you do, talk with us before you apply for a reverse mortgage, because a deferral leaves taxes unpaid, and a HECM requires property taxes to be paid. HUD's rules generally don't let a HECM borrower take part in a property tax deferral program, so a deferral would need to be paid off or resolved at closing.

Community property and title

Arizona is a community property state. That can affect who needs to sign at closing and how title is held, especially if one spouse is younger than 62 and won't be a borrower. Title companies handle this every day. If your spouse is under 62, read the Non-Borrowing Spouse guide first.

HOAs, condos, and manufactured homes

• HOA dues are part of your obligations with a reverse mortgage. Falling behind on them can put the loan in default, the same as property taxes or insurance.
• Condos need FHA project approval or single-unit approval for a HECM. Some proprietary programs accept condos that aren't FHA-approved.
• Manufactured homes can qualify for a HECM if built after June 15, 1976, set on a permanent foundation, and classified as real property. Homes in land-lease communities follow HUD's rules for leased land, which some community leases don't meet.
• Homes on acreage have to appraise as a residence, not a farm or business.

See Can I do a reverse mortgage on a manufactured home that has a stick built addition?

Insurance in Arizona

With a HECM, you must keep homeowners insurance on the home.

• Wildfire. In forested and high-country areas, wildfire risk can make coverage harder to find or more expensive.
• Flood. If the home is in a FEMA Special Flood Hazard Area, flood insurance is required. Monsoon flooding can reach homes outside those zones too, so ask your agent.

The HECM financial assessment looks at whether you can keep up with taxes, insurance, and HOA dues. If it looks tight, part of the loan can be set aside to pay them for you.

Home loans in Arizona

Reverse mortgages aren't all we do. We also help Arizona homeowners and buyers with:

• Buying a home, with conventional, FHA, VA, and jumbo loans. See Buy a Home, Conventional Loans, FHA Loans, and Jumbo Loans.
• Refinancing to change your rate or term, or take cash out. See Refinance.
• Home equity, with HELOCs and home equity loans. See Home Equity.
• VA loans for eligible veterans, service members, and surviving spouses. See VA Loans.

For a personalized quote, see Get a Rate Quote.

Where people get tripped up

• Putting the reverse mortgage on the wrong home. It has to be the home you live in most of the year.
• Assuming the Senior Freeze freezes taxes. It freezes the value, not the tax rate.
• Forgetting HOA dues. They're part of the deal.
• Missing the title question in a community property state.
• Waiting on insurance in wildfire areas.

A checklist for Arizona homeowners

1. Where you live, month by month. Be ready to talk about it.
2. Your property tax notice. Note whether it shows the Senior Freeze.
3. Your HOA statement, if you have one, with the monthly or annual dues.
4. Your homeowners insurance declarations page, with coverage and the renewal date.
5. Your mortgage statement, if you still have a mortgage.
6. Who lives in the home, and both spouses' ages.
7. Your plans. How long you'll stay, and what you need the money for.

Please don't send documents through the website. Your loan officer will tell you what's needed and the safe way to share it.

Common questions

Can I get a reverse mortgage on my winter home in Arizona?

Only if it's your primary residence, the home you live in for most of the year. If your main home is elsewhere, the reverse mortgage generally goes there.

Will a reverse mortgage affect Arizona's Senior Freeze?

It shouldn't on its own, because the freeze is based on age, income, ownership, and occupancy. Ask your county assessor how they treat reverse mortgage proceeds on the income test.

Are jumbo reverse mortgages available in Arizona?

Yes. Finance of America's HomeSafe Standard is approved in Arizona, and we compare several other programs too. I'll check which fit your home.

Can I buy a home in Arizona with a reverse mortgage?

Yes, with a HECM for Purchase. You make a down payment, and there are no required monthly mortgage payments afterward. You must continue to pay property taxes and homeowners insurance, maintain the home, and meet the other loan terms. See HECM for Purchase.

Does my spouse have to sign if they're not on the loan?

Often, yes, especially in a community property state like Arizona. The title company will tell us exactly what's needed.

What happens to my HOA dues with a reverse mortgage?

You keep paying them. They're part of the loan terms, along with property taxes, homeowners insurance, and upkeep.

Next step

Get your estimate, start your reverse mortgage review, or find a loan officer for Arizona. You can also call us at 530-888-6000. For the full picture, start with Reverse Mortgages.

Sources

• Mohave County Assessor, Senior Valuation Freeze: mohave.gov
• Maricopa County Assessor, Senior Valuation Protection form: maricopa.gov
• A.R.S. 42-17302, Election to defer residential property taxes; qualifications: justia.com
• HUD Mortgagee Letter 2019-17, summarized by Hinshaw & Culbertson: hinshawlaw.com
• HUD, FHA Reverse Mortgage for Seniors (HECM): hud.gov