Reverse Mortgages and Home Loans in Texas

Texas does homes its own way, and reverse mortgages are no exception. In most states, reverse mortgage rules come from HUD and a few state statutes. In Texas, they're written right into the state constitution, alongside the homestead protections Texans have guarded for more than a century.

That's a good thing for borrowers. It also means a Texas reverse mortgage has a few extra steps, and a timeline you need to plan around. Here's what to expect.

The short version

• We help Texas 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.
• Texas reverse mortgage rules are in the Texas Constitution. They require written consent from each owner and spouse, counseling, and no personal liability.
• There's a 12-day wait. The loan can't close until the 12th day after the lender gives you a required written notice.
• Counseling has a window. It must be done no earlier than 180 days and no later than 5 days before closing.
• For a proprietary (jumbo) reverse mortgage in Texas, plan on 62. The Texas Constitution requires the borrower or the borrower's spouse to be at least 62, and each lender sets its own rules beyond that.
• A property tax deferral and a reverse mortgage don't sit well together. Tell us if you have one.

Reverse mortgages in Texas

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.

Refinancing an existing HECM? In Texas, counseling can't be waived on a HECM to HECM refinance, even when FHA's waiver conditions are met. Plan on a counseling session. See Reverse Mortgage Refinance.

Texans 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 bad year in the market.
• Add monthly income.
• Buy a home that fits the next stage of life with a HECM for Purchase. Texas allowed reverse mortgages for buying a homestead starting in late 2013. We can generally close in 30 days or less, but we always follow the contract, and in Texas we build the 12-day notice into that timeline.

HECM

The FHA-insured HECM is the reverse mortgage most Texas 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.

In Texas, Finance of America's HomeSafe Standard is approved for borrowers 62 and older. Some proprietary programs accept younger borrowers in other states, but not in Texas. Availability for the other programs varies and changes over time. See Proprietary (Jumbo) Reverse Mortgages.

What the Texas Constitution requires

Texas allows reverse mortgages on a homestead only if they meet a list of conditions in Article XVI, Section 50 of the Texas Constitution. The big ones:

Written consent from every owner and spouse

The lien has to be voluntary, and each owner and each owner's spouse must agree in writing. That includes a spouse who isn't on the loan. If your spouse is younger than 62, read the Non-Borrowing Spouse guide first.

An age requirement

The Texas Constitution requires the borrower or the borrower's spouse to be at least 62. A HECM also requires every borrower to be at least 62 under HUD's rules.

No personal liability

Neither the owners nor their spouses are personally liable for the loan. The home is the only thing that secures it. That lines up with the HECM's own non-recourse protection.

Counseling, in a set window

The borrower and the borrower's spouse must attest in writing that they received counseling about reverse mortgages and other options. In Texas, that counseling must be completed no earlier than 180 days and no later than 5 days before closing. See Reverse Mortgage Counseling.

The 12-day notice

The lender must give you a required written notice about the reverse mortgage, on its own separate document, signed by you and by the lender or loan originator. The loan can't close until the 12th day after that notice is provided.

My advice: get counseling done early and get the notice out early. Those two steps set the pace for a Texas closing, and planning around them keeps a purchase or a payoff on schedule.

When the loan can come due

The Constitution lists the events that can make a Texas reverse mortgage due, including the death of all borrowers, a sale or transfer of the home, and being away from the home more than 12 consecutive months without the lender's written approval. Failing to pay property taxes or insurance, or to keep the home in repair, can also trigger it after notice and a chance to fix it.

Protection from quick foreclosure

In most cases, a Texas reverse mortgage can be foreclosed only with a court order, after notice and a cure period. The main exceptions are the death of all borrowers or a sale or transfer of the home.

Limits on how money is advanced

Texas has its own rules for how reverse mortgage advances can be made. I'll walk you through the ones that apply to your loan.

Texas property taxes and seniors

The 65 or older homestead exemption

Texas homeowners 65 or older can get an additional homestead exemption from school taxes, and a ceiling that generally keeps school taxes on the home from going up as long as you live there. Many local taxing units offer their own senior exemptions too. Apply through your county appraisal district.

How it works with a reverse mortgage: the exemption and the school tax ceiling are based on age, ownership, and living in the home. A reverse mortgage doesn't change who owns the home or who lives there, so it shouldn't affect them on its own.

The 65 or older tax deferral

Texas also lets homeowners 65 or older, disabled homeowners, and some disabled veterans defer property taxes on their homestead under Tax Code Section 33.06. A few things to know:

• It postpones taxes. It doesn't cancel them. Interest keeps adding up on the deferred amount.
• It ends when you stop living there. A surviving spouse 55 or older can sometimes continue it.
• Then the bill comes due. Deferred taxes, interest, and penalties must be paid within 180 days after the deferral ends.
• Mortgages and deferrals can clash. Most deeds of trust treat unpaid property taxes as a default.

How it works with a reverse mortgage: a HECM requires property taxes to be paid, and HUD's rules don't let a HECM borrower take part in a tax deferral program or allow liens on the home unless they're subordinate to the HECM. If you're deferring taxes now, plan on paying off the deferred balance at closing, usually from the loan. After that, you pay your property taxes yourself every year. Sometimes a reverse mortgage does more for you than the deferral. Sometimes it doesn't. I'll lay out both honestly.

Texas home equity loans are different too

Texas also has its own rules for home equity loans, separate from reverse mortgages. They're written into the same section of the Constitution and differ from the rules in other states. We offer fixed home equity loans in Texas, subject to those rules, but we don't currently offer HELOCs here. If you're comparing a reverse mortgage with a Texas home equity loan, we'll walk through the Texas rules for each. See Home Equity and HECM vs. HELOC.

Insurance in Texas

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

• Wind and hail. Much of Texas sees hail, and coastal homes face hurricane wind risk. In designated coastal areas, wind coverage may come from the Texas Windstorm Insurance Association if the regular market won't write it.
• Flood. If the home is in a FEMA Special Flood Hazard Area, flood insurance is required. Flooding reaches homes outside those zones too, so ask your agent.

Get 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.

Manufactured homes, condos, and acreage

• Manufactured homes can qualify for a HECM if built after June 15, 1976, set on a permanent foundation, and treated as real property. In Texas, that usually means the home's ownership records show it as real property. Homes on leased land follow HUD's lease rules.
• Condos need FHA project approval or single-unit approval for a HECM. Some proprietary programs accept condos that aren't FHA-approved.
• Homes on acreage have to appraise as a residence, not a farm, ranch, or business.

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

Home loans in Texas

Reverse mortgages aren't all we do. We also help Texans 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. Texas cash-out rules are their own animal. See Refinance.
• Home equity, with fixed Texas home equity loans (not HELOCs). 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

• Not planning for the 12 days. The notice clock sets the earliest closing date.
• Counseling too early or too late. It has to land between 180 and 5 days before closing.
• Leaving out a spouse. Every owner's spouse has to consent in writing.
• Forgetting the tax deferral. It usually gets paid off at closing.
• Assuming a younger jumbo borrower can qualify. In Texas, plan on 62.

A checklist for Texas homeowners

1. Your appraisal district notice, showing your homestead and 65 or older exemptions.
2. Your deferral status. If you're deferring taxes, ask the tax office for the balance.
3. Your homeowners insurance declarations page, plus any windstorm or flood policy.
4. Your mortgage statement, if you still have a mortgage.
5. Every owner and spouse, with ages, so we can plan consent and counseling.
6. Your target date, if you're buying, so we can schedule counseling and the 12-day notice.
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

Why does a Texas reverse mortgage take 12 days longer?

Because the Texas Constitution says the loan can't close until the 12th day after the lender gives you a required written notice. Starting early keeps it from slowing anything down.

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

Yes. In Texas, each owner and each owner's spouse must consent in writing.

Can I get a reverse mortgage in Texas before 62?

Plan on 62. The Constitution requires the borrower or the borrower's spouse to be 62, HECMs require every borrower to be 62, and HomeSafe Standard requires 62 in Texas.

Can I keep my Texas property tax deferral with a reverse mortgage?

Generally no. Under HUD's rules, a HECM borrower can't stay in a property tax deferral program, so the deferred balance is usually paid off at closing.

Will a reverse mortgage affect my 65 or older exemption or school tax ceiling?

It shouldn't on its own. They're based on age, ownership, and occupancy. Check with your appraisal district if you move.

Can I buy a home in Texas 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.

Next step

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

Sources

• Texas Constitution, Article XVI, Section 50 (reverse mortgage provisions summarized by Open Exam Prep): open-exam-prep.com
• Texas Legislature, S.J.R. 18 bill analysis (83rd Legislature, 2013): capitol.texas.gov
• "New Texas reverse mortgage disclosures take effect," HousingWire, November 25, 2013: housingwire.com
• Fort Bend Central Appraisal District, Tax Code 33.06 deferral: fbcad.org
• HUD Mortgagee Letter 2019-17, summarized by Hinshaw & Culbertson: hinshawlaw.com
• HUD, FHA Reverse Mortgage for Seniors (HECM): hud.gov