Reverse Mortgages and Home Loans in Colorado

Colorado homeowners tend to ask me sharp questions. A lot of them have watched their home's value climb for years, and they want to know how to use that equity without giving up the house they love, whether it's a ranch in Pueblo or a condo in Denver.

A reverse mortgage can be part of that answer. In Colorado, though, the loan is only half the plan. The other half is property taxes, because the state has two senior programs that behave very differently once a reverse mortgage enters the picture.

The short version

• We help Colorado 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.
• The senior property tax exemption can cut the taxable value of your home if you're 65 and have lived there 10 years. A reverse mortgage doesn't change who owns or lives in the home.
• The Property Tax Deferral Program is different. If you take out a reverse mortgage after a deferral is granted, the deferral loan comes due.
• Colorado law treats reverse mortgage payments as loan proceeds, not income, for state means-tested programs.
• Insurance is getting harder in wildfire and hail country. Plan for it before you plan the loan.

Reverse mortgages in Colorado

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.

Coloradans 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 stretch in the market.
• Add monthly income.
• Buy a home that fits the next stage of life with a HECM for Purchase, like a single-level home with no stairs to shovel in February.

HECM

The FHA-insured HECM is the most common reverse mortgage in Colorado. 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.

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

In a lot of Front Range and mountain towns, home values sit well above the HECM limit. That's where a jumbo program can 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 Colorado. Availability for the others varies and changes over time. See Proprietary (Jumbo) Reverse Mortgages.

Counseling in Colorado

For a HECM, you meet with an independent, HUD-approved counselor before you apply. Colorado law also says a lender can't make a reverse mortgage unless you confirm in writing that you were advised to get independent counseling. See Reverse Mortgage Counseling.

Colorado's two senior property tax programs

This is the part I'd read twice. The two programs sound similar. They aren't.

The senior property tax exemption

If you're 65 or older on January 1, and you've owned and lived in your home as your primary residence for at least 10 consecutive years, you may qualify for Colorado's senior property tax exemption. When the state budget allows, it exempts part of your home's actual value. Your county assessor can tell you the current amount. You apply with your county assessor, generally by July 15.

A surviving spouse can sometimes keep it, if the spouse who qualified met the rules on any January 1 since 2002, the survivor hasn't remarried, and they still live in the same home.

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 exemption on its own. If you move, though, the exemption rules at a new home are a real consideration. Moving with a HECM for Purchase means a new home, and you'll want to ask the assessor how the exemption works at the new address before you go.

The Property Tax Deferral Program

The State Treasurer runs a program that lets homeowners 65 and older put off paying property taxes. The state pays the county, and the deferred taxes plus interest become a lien on the home, repaid later. Applications run from January 1 to April 1.

How it works with a reverse mortgage: it generally doesn't. The Treasury's own FAQ says that if a reverse mortgage is taken out after the deferral is granted, the deferral loan becomes due and payable. Federal HECM rules point the same way: a HECM borrower can't take part in a property tax deferral program, and other liens on the home are allowed only if they're subordinate to the HECM. The program also limits how much you can owe against the home in total.

In practice:

• If you're in the deferral program and want a reverse mortgage, plan on paying off the deferred balance at closing, usually from the loan. After that, you pay your property taxes yourself every year.
• If you already have a reverse mortgage, the deferral program generally isn't an option.

That isn't a reason to skip a reverse mortgage. It's a reason to compare honestly. Sometimes the deferral is enough by itself. Sometimes a reverse mortgage does more, and paying off the deferral is just part of closing. I'll lay out both.

Colorado law protects your benefits

Colorado's reverse mortgage law says that reverse mortgage payments are treated as loan proceeds, not income, when the state decides eligibility for means-tested programs like supplemental security income, energy assistance, and Medicaid (the Colorado Medical Assistance Act). Money you haven't drawn yet is treated as equity in your home.

That's helpful, but it isn't the whole story. Money you draw and leave sitting in the bank can still count toward asset limits. If you receive or may need those benefits, talk with a benefits professional before you draw large amounts. See Paying for In-Home Care With a Reverse Mortgage.

Insurance in Colorado

With a HECM, you must keep homeowners insurance on the home. Hail, wind, and wildfire have made coverage pricier and harder to find in parts of the state.

• The Colorado FAIR Plan was created in 2023 as an insurer of last resort for homeowners who can't get coverage in the regular market. It offers basic coverage, such as fire and lightning, on an actual cash value basis, with a cap on coverage. Ask an independent agent whether it fits and whether it meets the lender's requirements.
• Flood insurance is required if the home is in a FEMA Special Flood Hazard Area.

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

Mountain, rural, and manufactured homes

A cabin, a home on acreage, or a manufactured home can all qualify for a HECM in the right circumstances. A manufactured home generally must be built after June 15, 1976, sit on a permanent foundation, and be classified as real property. A home on acreage has to appraise as a residence, not a farm or business. The home must be your primary residence, so a mountain getaway you visit on weekends won't work. See Can I do a reverse mortgage on a manufactured home that has a stick built addition?

Condos need FHA project approval or single-unit approval for a HECM. Some jumbo programs accept condos that aren't FHA-approved.

Home loans in Colorado

Reverse mortgages aren't all we do. We also help Coloradans 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

• Mixing up the exemption and the deferral. The exemption generally keeps working with a reverse mortgage. The deferral generally doesn't.
• Moving without asking about the senior exemption. Colorado now lets some seniors keep the exemption when they move, so ask the assessor before you buy your next home.
• Waiting on insurance. In hail and wildfire areas, coverage can take time to line up.
• Counting on a second home. A reverse mortgage is only for the home you live in.

A checklist for Colorado homeowners

1. Your property tax bill. Note whether it shows the senior exemption.
2. Your deferral status. If you're in the Property Tax Deferral Program, ask the State Treasury for a payoff amount.
3. Your homeowners insurance declarations page, with coverage and the renewal date.
4. Your flood zone, from your county or FEMA's flood map.
5. Your mortgage statement, if you still have a mortgage.
6. Who lives in the home. If your spouse is younger than 62, read the Non-Borrowing Spouse guide first.
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 keep Colorado's senior property tax exemption with a reverse mortgage?

Generally yes. A reverse mortgage doesn't change ownership or occupancy, which is what the exemption is based on. Keep living in the home and report any changes to the assessor.

Can I get a reverse mortgage if I'm in the Property Tax Deferral Program?

Yes, but the deferral loan generally becomes due when you take out a reverse mortgage, so it's usually paid off at closing. We'll build that payoff into your estimate.

Will a reverse mortgage affect my Medicaid in Colorado?

Colorado law treats reverse mortgage payments as loan proceeds, not income, for state means-tested programs. But money you hold in the bank can count toward asset limits. Check with a benefits professional before you draw.

Are jumbo reverse mortgages available in Colorado?

Yes, several programs may be. Each lender approves states and property types on its own, so I'll check the programs we compare for your home.

Can I use a reverse mortgage to buy a home in Colorado?

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. We can generally close in 30 days or less, but we always follow the contract. See HECM for Purchase.

What if I can't find homeowners insurance?

Talk with an independent agent and ask about the Colorado FAIR Plan. You need coverage that meets the lender's requirements before a HECM can close.

Next step

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

Sources

• Colorado Division of Property Taxation, Property Tax Exemption for Senior Citizens in Colorado: dpt.colorado.gov
• Colorado Department of the Treasury, Property Tax Deferral Program FAQ: treasury.colorado.gov
• C.R.S. 11-38-110, Treatment of reverse mortgage loan proceeds by public benefit programs: colorado.public.law
• C.R.S. 11-38-111, Consumer information and counseling: colorado.public.law
• Colorado Division of Real Estate, HOA Center Advisory on the FAIR Plan: dre.colorado.gov
• HUD Mortgagee Letter 2019-17, summarized by Hinshaw & Culbertson: hinshawlaw.com
• HUD, FHA Reverse Mortgage for Seniors (HECM): hud.gov