Reverse Mortgages and Home Loans in Washington

For homeowners, Washington is really two states. West of the Cascades, it's condos, older bungalows, and values that have climbed for years. East of the mountains, it's more acreage, more manufactured homes, and wildfire season. A reverse mortgage works in both, but the details change.

What doesn't change is the order of operations. In Washington, before we talk about how much money you can get, we talk about your property taxes, because the state's senior tax programs and a reverse mortgage don't always get along.

The short version

• We help Washington 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.
• Washington regulates proprietary reverse mortgages on its own. The borrower must be at least 60, and counseling has to happen before a final application or any fees. HECMs follow HUD's federal rules instead.
• No line of credit on proprietary programs in Washington. If you want a line of credit, the HECM is usually the answer.
• The senior property tax exemption is based on age, income, ownership, and occupancy.
• The senior property tax deferral generally can't stay in place with a HECM. An existing deferral lien is usually paid off at closing.
• Ask about both programs before you apply. It's much easier to plan around them than to untangle them at closing.

Reverse mortgages in Washington

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.

Washington 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 bad year in the market.
• Add monthly income.
• Buy a home that fits the next stage of life with a HECM for Purchase. 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 Washington 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. In Washington, that matters more than in most states, because proprietary programs here don't offer a line of credit at all.

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, as some homes around Puget Sound are, 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.

A few Washington specifics:

• Finance of America's HomeSafe Standard is approved in Washington, for borrowers 60 and older.
• Proprietary programs in Washington don't offer a line of credit. You'll generally take the money as a lump sum or another payout the program allows.
• Availability for the other programs varies and changes over time.

So in Washington, the jumbo vs. HECM choice often comes down to this: do you need more money than a HECM can give you, or do you want a growing line of credit? Sometimes you can't have both, and I'll show you the tradeoff in real numbers. See Proprietary (Jumbo) Reverse Mortgages.

Washington's rules for proprietary reverse mortgages

Washington is one of the few states that writes its own rules for proprietary reverse mortgages. Under the state's regulation, a proprietary lender generally:

• Can't lend to anyone under 60. The borrower must be at least 60 when the loan is signed.
• Must refer you to counseling first. The lender has to refer you to a HUD-approved independent counseling agency and give you a list of at least five agencies, at least two of which offer counseling by phone.
• Can't take your final application or charge fees until it has the counseling certification signed by you and the counselor.
• Can't require you to buy an annuity, insurance, or another financial product to get the loan, and can't offer or refer you to those products before closing or before your right to cancel runs out.
• Can't come after you for a shortfall. The lender can be repaid only from the sale of the home, with no deficiency judgment.
• Must let you prepay without penalty, with a narrow exception tied to fees the lender paid or waived.
• Can't call the loan due for a short absence. Being away up to 180 consecutive days doesn't trigger repayment on its own.

These state rules cover proprietary (non-HECM) reverse mortgages. They don't apply to HECMs, which follow HUD's federal rules for counseling, non-recourse protection, and occupancy.

Washington's senior property tax programs

Washington has two programs that sound alike. They work very differently with a reverse mortgage.

The senior exemption

Washington offers a property tax exemption for homeowners who are at least 61 by December 31 of the year before taxes are due, or who meet certain disability or veteran rules. You must own and live in the home, and your combined disposable income must be at or below your county's threshold. You renew at least every six years.

How it works with a reverse mortgage: the exemption is based on age, income, ownership, and occupancy. A reverse mortgage doesn't change who owns the home or who lives there, and loan money is a loan, not income. Still, ask your county assessor how they treat reverse mortgage proceeds before you apply.

The senior deferral

Homeowners 60 and older with qualifying income may be able to defer property taxes. The state pays the taxes and records a lien on the home, with interest, and the deferred amount comes due when the home is sold, the owner dies, or it's no longer the primary residence. There's also a limited-income deferral for the second-half payment due in October, with applications due by September 1.

How it works with a reverse mortgage: carefully.

• A deferral is a lien. HUD's rules don't let a HECM borrower stay in a tax deferral program or keep a lien on the home unless it's subordinate to the HECM. A state deferral lien generally isn't, so it usually has to be paid off at closing. I'll work with the title company on that.
• After that, the taxes are yours again. You must continue to pay property taxes and homeowners insurance, maintain the home, and meet the other loan terms.

Apply for the exemption before the deferral. See the Washington Department of Revenue for details.

Community property and title

Washington 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, but it's worth knowing up front. If your spouse is under 62, read the Non-Borrowing Spouse guide first.

Insurance in Washington

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

• Wildfire. In parts of eastern and central Washington, wildfire risk can make coverage harder to find or more expensive. Get quotes early.
• Flood. If the home is in a FEMA Special Flood Hazard Area, flood insurance is required.
• Earthquake. Earthquake coverage generally isn't required for a HECM. If you live in an earthquake-prone area, ask your agent about it.

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.

Rural, manufactured, and condo homes

• Manufactured homes can qualify for a HECM if built after June 15, 1976, set on a permanent foundation, and classified as real property.
• Homes on acreage have to appraise as a residence, not a farm or business.
• Condos need FHA project approval or single-unit approval for a HECM. Some proprietary programs may accept condos that aren't FHA-approved, depending on the program and what's available in Washington.
• The home must be your primary residence, so a cabin you visit on weekends won't work.

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

Home loans in Washington

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

Washington cities

• Seattle Reverse Mortgages
• Spokane Reverse Mortgages

Where people get tripped up

• Expecting a jumbo line of credit. Proprietary programs in Washington don't offer one.
• Mixing up the exemption and the deferral. One is about income and occupancy. The other is about equity.
• Forgetting the existing deferral lien. It usually gets paid off at closing.
• Waiting on insurance in wildfire country.
• Counting on a second home. A reverse mortgage is only for the home you live in.

A checklist for Washington homeowners

1. Your property tax statement. Note whether it shows the senior exemption.
2. Your deferral status. If you have a state deferral, ask 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, and both spouses' ages.
7. Your plans. How long you'll stay, and whether you want a lump sum or a line of credit.

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 jumbo reverse mortgage line of credit in Washington?

No. Proprietary programs in Washington don't offer a line of credit. If you want a growing line of credit, the HECM is usually the way to go.

How old do I have to be for a reverse mortgage in Washington?

For a HECM, 62. Washington's rules allow proprietary reverse mortgages starting at 60, and Finance of America's HomeSafe Standard is available in Washington at 60 and older.

Will a reverse mortgage affect my Washington senior tax exemption?

The exemption is based on age, income, ownership, and occupancy. A reverse mortgage is a loan, not income, but ask your county assessor how they count it.

Can I keep my Washington property tax deferral?

Generally not with a HECM. The deferral is a lien and usually gets paid off at closing. After that, you pay property taxes yourself.

Does Washington require counseling for a reverse mortgage?

Yes. Every HECM requires HUD-approved counseling, and Washington's rules for proprietary loans require counseling before a final application or any fees. See Reverse Mortgage Counseling.

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

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 Washington. You can also call us at 530-888-6000. For the full picture, start with Reverse Mortgages.

Sources

• WAC 208-620-820, Proprietary reverse mortgage loan terms and conditions: leg.wa.gov
• Washington Department of Revenue, Property tax exemptions and deferrals: dor.wa.gov
• Washington Department of Revenue, Property Tax Deferral for Senior Citizens and People with Disabilities: dor.wa.gov
• HUD Mortgagee Letter 2019-17, summarized by Hinshaw & Culbertson: hinshawlaw.com
• HUD, FHA Reverse Mortgage for Seniors (HECM): hud.gov