Sacramento Reverse Mortgages and Home Loans

Here's a situation that comes up all the time in retirement planning. A couple in their late 60s or 70s owns a two-story house that was perfect when the kids were home. Now the stairs are getting old, the yard is getting bigger every year, and they'd love something smaller. The catch: they don't want to spend all their savings on the next house, and they don't want a new monthly payment either.

That's where a reverse mortgage for a purchase comes in, and in California, it has a helpful partner called Prop 19. This page covers both, plus the regular reverse mortgage for people who want to stay put.

The short version

• We help with reverse mortgages and regular home loans for Sacramento homes, through our California loan officers.
• Staying put? A HECM can pay off your mortgage and give you access to equity, with no required monthly mortgage payments. You must continue to pay property taxes and homeowners insurance, maintain the home, and meet the other loan terms.
• Downsizing? A HECM for Purchase plus Prop 19 can help you buy the next home with a smaller down payment and keep a lower tax base.
• California makes you wait 7 days after counseling before a reverse mortgage application is final.
• Property Tax Postponement and a reverse mortgage don't mix.

If you want to stay in your Sacramento home

The HECM

The HECM is the FHA-insured reverse mortgage. You must be 62 or older, live in the home as your primary residence, and have enough equity. If you still owe on the house, the HECM pays that off first. What's left can be a line of credit, monthly payments, a lump sum, or a mix.

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

The line of credit is the piece I'd look at hardest. On an adjustable HECM, the unused part grows over time, and the lender can't freeze or cut it as long as you meet the loan terms. For a lot of people, that's a better safety net than a bank HELOC. See HECM vs. HELOC and the standby line of credit strategy.

Proprietary (jumbo) reverse mortgages

If your home is worth more than the HECM limit, a jumbo reverse mortgage may give you access to more. We compare programs including Mutual of Omaha Secure Equity, Finance of America HomeSafe, Longbridge Platinum, Smartfi Choice, Nationwide Equities EquityPower, and MCM Holdings MCM Edge, and availability varies by state. HomeSafe Standard is approved in California. See Lending Limits.

If you want to downsize: the HECM for Purchase

How it works

The HECM for Purchase lets you buy a home with two pieces: a down payment from you, and a reverse mortgage for the rest. After closing, there are no required monthly mortgage payments. You must continue to pay property taxes and homeowners insurance, maintain the home, and meet the other loan terms.

The down payment usually comes from selling your current home. How much you need depends mostly on the age of the youngest borrower, rates, and the price of the new home. Older buyers generally need less down.

A few rules to know:

• You must be 62 or older.
• The new home must become your primary residence within 60 days of closing.
• The seller can contribute toward some of your closing costs, up to a limit.

Why Prop 19 makes this better in California

If you're 55 or older and sell your primary residence, Prop 19 lets you transfer its taxable value to a replacement home anywhere in California:

• Up to three times.
• The replacement must be bought or built within two years of the sale.
• If the new home costs more than the old one sold for, the difference is added to the transferred value.
• You file with the assessor in the county where the new home is.

Put those together: sell the big house, keep the low tax base, and buy the smaller one with a HECM for Purchase so your savings stay in the bank. Lower taxes, no required monthly mortgage payment, and money left over. You must continue to pay property taxes and homeowners insurance, maintain the home, and meet the other loan terms. Talk with the county assessor and your tax professional before you list the house. It's a conversation for your CPA too.

Timing the sale and the purchase

The hardest part of downsizing is the order of operations. Do you sell first and rent for a month, or buy first and carry two homes? With a HECM for Purchase, your down payment usually depends on the sale, so we'll map out the timing before you list. Read The Purchase Reverse Mortgage Guide for Real Estate Professionals and share it with your agent.

California rules every reverse mortgage borrower should know

Prop 13 stays with you

Under Prop 13, your assessed value can generally rise by no more than 2 percent a year. A reverse mortgage is a loan, not a change in ownership, so it doesn't reset your assessment.

The 7-day wait after counseling

Before any HECM, you meet with an independent, HUD-approved counselor. California then makes you wait: a lender can't accept your final, complete reverse mortgage application, or charge you fees, until 7 days after counseling. California law also bars a lender from requiring you to buy an annuity to get a reverse mortgage. Read Why do I need to wait 7 days after counseling?

If you're buying a home, do counseling before you write an offer. It keeps the 7 days from squeezing your escrow.

Property Tax Postponement

California's State Controller runs a Property Tax Postponement program for some homeowners 62 and older with limited income and enough equity. One of its rules is that the property can't have a reverse mortgage, and getting one makes any postponed taxes due. If you're in the program now, tell me before we start, so we plan for paying it off at closing. Details are on the State Controller's site.

Insurance

You must keep homeowners insurance on the home. If you've had trouble finding a policy and ended up on the California FAIR Plan, that's fine. The lenders we work with accept a FAIR Plan policy paired with a difference-in-conditions policy. Tell me early so we can check the coverage amounts. Your premium is part of the financial assessment.

Home loans for Sacramento buyers and owners

We also help with:

• Buying a home and seeing your buying power before you shop.
• Refinancing.
• Home equity loans and HELOCs.
• FHA loans, conventional loans, and jumbo loans.
• VA loans for eligible veterans and service members.

Request a rate quote for your numbers.

How we work with Sacramento clients

1. A conversation by phone or video about whether to stay or move.
2. Counseling with an independent, HUD-approved counselor, then the 7-day wait.
3. Application and appraisal.
4. Signing is usually at home with a mobile notary, or at escrow on a purchase.

Sacramento resources

• California Department of Aging: find services in your county
• California State Board of Equalization: Prop 19
• California State Controller: Property Tax Postponement
• HUD-approved housing counselors: hud.gov/counseling or (800) 569-4287

Common questions

Can I buy a smaller home with a reverse mortgage?

Yes. That's what the HECM for Purchase is for. You make a down payment and the reverse mortgage covers the rest, with 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.

Can I use Prop 19 and a HECM for Purchase together?

Often, yes, if you're 55 or older for Prop 19 and 62 or older for the HECM, and you meet each program's rules.

Will a reverse mortgage reassess my property taxes?

No. It's a loan, not a change in ownership.

How long does a purchase take?

From accepted offer to closing, we can generally close in 30 days or less, but we always follow the contract.

Why do I have to wait 7 days after counseling?

It's California law, meant to give you time to think it over without pressure.

Next step

Get My Estimate, find a loan officer for California, or call us at 530-888-6000. See our California page and the full guide to Reverse Mortgages.

Sources

• California State Board of Equalization, Introduction to Prop 19: boe.ca.gov
• California State Controller's Office, Property Tax Postponement Fact Sheet: sco.ca.gov
• California Civil Code section 1923.2: justia.com
• HUD Mortgagee Letter 2024-06: hud.gov
• 24 CFR 206.39: law.cornell.edu
• HUD, FHA Reverse Mortgage for Seniors (HECM): hud.gov