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Reverse mortgage guide
A reverse mortgage lets homeowners 62 and older turn part of their home equity into cash, monthly payments, or a line of credit, while they keep living in the home and keep the title. There are no required monthly mortgage payments, but you must continue to pay property taxes and homeowners insurance, maintain the home, and meet the other loan terms. Most people use the FHA-insured HECM. Private jumbo programs can work for higher-value homes. This guide covers who qualifies, how the amount is figured, your payout choices, costs, counseling, every step from first call to closing, and what happens when the loan comes due.
If you're new to reverse mortgages, start here. This is the conversation I have with almost every family, in the order people usually ask the questions.
A reverse mortgage isn't magic, and it isn't a trap. It's a loan with a very specific job: letting you use some of your home's value without selling it and without taking on a monthly mortgage payment. For the right person, that changes retirement. For the wrong person, it's an expensive mistake. My job is to help you figure out which one you are.
With a regular mortgage, you pay the bank every month and your balance goes down. A reverse mortgage runs the other way. The lender pays you, and your balance goes up over time as interest and mortgage insurance are added.
You don't have to make monthly mortgage payments. You can if you want to, and payments lower your balance, but you don't have to. The loan is repaid later, usually from the sale of the home, after the last borrower moves out or passes away.
What doesn't change is the job of owning a home. You must continue to pay property taxes and homeowners insurance, maintain the home, and meet the other loan terms. If you don't, the loan can become due. That's the part I want every client to understand before anything else.
For the mechanics in more detail, see How a Reverse Mortgage Works.
Most reverse mortgages are a Home Equity Conversion Mortgage, or HECM. It's insured by FHA and follows HUD's rules. Those rules are what give you the protections in this guide. Read more about the HECM.
There are a few versions:
Private lenders offer their own reverse mortgages, often called jumbo or proprietary reverse mortgages. They aren't insured by FHA, so they set their own rules. In general:
Because they don't follow HECM rules, I check each program's protections in writing. See Proprietary (Jumbo) Reverse Mortgages.
For a HECM:
HUD doesn't set a minimum credit score for a HECM. Your credit history still matters, though, because it's part of the financial assessment.
The home must be an eligible type:
The home also has to meet FHA's property standards. If the appraiser finds repairs, some can be done after closing with money set aside from the loan. Others need to be done first.
You need enough equity for the reverse mortgage to pay off any existing mortgage and other liens at closing. If you owe too much, you may be able to bring cash to closing to cover the difference. See Does my home need to be paid off?
If any of your liens are less than 12 months old, read Lien Seasoning Requirements first. It catches a lot of people.
The total amount available to you is called the principal limit. On a HECM, HUD figures it from three things:
From the principal limit, you subtract any mortgage being paid off and any closing costs you finance. What's left is what you can actually use.
In the first year, HUD generally limits how much you can take, usually 60 percent of your principal limit, unless you need more to pay off your mortgage and other required costs at closing. On an adjustable HECM, the rest becomes available after the first year.
This rule exists for a reason. It keeps people from spending everything on day one and having nothing left when they need it later.
The fastest way to see what's possible is to get your estimate. You can also read How much money would I be eligible for?
On an adjustable HECM, you can choose:
You can generally change your payout plan later for a small fee. On a fixed-rate HECM, your only choice is a lump sum at closing.
Which is best? It depends on what you need the money for. If it's a safety net, the line of credit usually wins. Read the standby line of credit strategy. If it's steady income, monthly payments can make sense. If you're paying off a big mortgage, much of the money goes there first.
A reverse mortgage has two kinds of costs.
Upfront costs, usually paid from the loan at closing:
Ongoing costs, added to your balance over time:
I don't type cost figures here, because they change. You'll find the current numbers, and how each one works, on Reverse Mortgage Costs. To compare total cost over time, read What Is the TALC?
The honest bottom line: upfront costs are the main reason a reverse mortgage is a poor fit if you might move in a few years.
Before you can apply for a HECM, you meet with an independent, HUD-approved counselor. They don't work for me or for any lender. Their job is to make sure you understand the loan, the costs, and your other options.
Sessions are usually by phone or video and last about 60 to 90 minutes. Family is welcome. Afterward, you get a certificate that's good for a limited time.
Our philosophy has always been that you shouldn't learn anything new during counseling. If I've done my job, the session confirms what you already know. See Reverse Mortgage Counseling and 10 Questions To Know For Reverse Mortgage Counseling.
In California, there's an extra rule: a lender can't accept your final and complete application until at least 7 days after counseling. See Why do I need to wait 7 days after counseling?
Since 2015, lenders have had to review whether you can keep up with your property taxes, insurance, and other property charges before approving a HECM. They look at:
If the review shows you might struggle, the lender may require a Life Expectancy Set-Aside, or LESA. Part of your loan is set aside to pay your property taxes and insurance for you. It lowers the money available for other things, but it also takes those bills off your plate. For some people, that's a relief.
See Reverse Mortgage Financial Assessment.
We talk about your goals, your home, your family, and your timeline. I'll run a personalized estimate and tell you honestly whether I think a reverse mortgage fits. Sometimes the answer is no, and I'll tell you what might work better.
You call a HUD-approved agency and complete counseling. You get your certificate.
We complete the application together and gather documents, like your ID, proof of income, your mortgage statement, your homeowners insurance, and your property tax bill. Please don't send documents through the website. Your loan officer will give you a secure way to share them.
An FHA appraiser visits your home to confirm its value and condition. If repairs are needed, we'll talk about whether they can be handled after closing.
Underwriting reviews your file, including the financial assessment, title, and appraisal. They may ask follow-up questions. This is where good, early answers save time.
You sign your documents with a notary, often at home. On an adjustable-rate HECM, you'll see two notes and two deeds of trust, which is normal. A fixed-rate HECM usually has just one of each. See Why Reverse Mortgages Have 2 Notes and 2 Deeds of Trust.
If you're refinancing the home you live in, you have three business days to cancel before the loan funds.
After the cancellation period, the loan funds. Your old mortgage is paid off, and your money becomes available in the way you chose.
It varies with your appraisal, title, and how quickly documents come in. I'll give you a realistic timeline for your situation at our first conversation.
Once the loan closes, you have a few ongoing jobs:
If you ever fall behind, call your servicer right away. There are often options if you act early.
A HECM generally becomes due when:
When the loan comes due, your heirs have options:
A HECM is non-recourse. If the home sells for less than the balance, your heirs don't pay the difference. They also get time to act: generally 30 days to respond, six months to sell or pay off, and up to two 90-day extensions if they're working on it.
See Reverse Mortgages and Heirs.
If you're both 62 or older, you can both be borrowers. If one of you is younger, the younger spouse can be an eligible non-borrowing spouse. They can generally stay in the home after you die, as long as they meet HUD's requirements, but they can't draw more money from the loan. Their younger age also lowers how much is available.
This is the single most important planning question for couples. Read the Non-Borrowing Spouse guide before you decide.
After all these years, the same handful of surprises come up again and again. Here they are, so they don't surprise you.
"I thought the money was all mine to spend." If you still have a mortgage, the reverse mortgage pays it off first. What's left after that, and after any financed closing costs, is what you can use. Your estimate shows both numbers. Look at the second one.
"Why can't I take it all now?" The first-year limit. On an adjustable loan, the rest opens up after a year. Most people end up glad they couldn't spend it all at once.
"I forgot the taxes were still my job." There are no required monthly mortgage payments, but you must continue to pay property taxes and homeowners insurance, maintain the home, and meet the other loan terms. Put the tax and insurance due dates on the calendar now. If they've ever been a struggle, a LESA may be the better setup.
"My spouse wasn't on the loan, and nobody explained what that meant." This one keeps me up at night. If one of you is under 62, sit down together and read the spouse section twice.
"The documents say I owe way more than I borrowed." That's the recorded ceiling, not your balance. See Why Reverse Mortgages Have 2 Notes and 2 Deeds of Trust.
"My kids were surprised." Talk to them before you sign, not after. It's a lot easier to explain a plan than a surprise. I'm glad to be on that call.
"Someone told me to use the money to buy an annuity." Be careful. HUD rules bar lenders from requiring you to buy other products as a condition of a HECM, and anyone pushing you to move the money somewhere fast deserves a hard second look.
A reverse mortgage isn't the only way to use your home's value. Compare:
Pros: no required monthly mortgage payments, flexible payouts, a growing line of credit, you keep the title, non-recourse protection, and spouse protection on a HECM. You must continue to pay property taxes and homeowners insurance, maintain the home, and meet the other loan terms.
Cons: high upfront costs, a growing balance, less equity for heirs, ongoing obligations that can make the loan come due, and possible effects on needs-based benefits.
The full picture is on Reverse Mortgage Pros and Cons. If you've heard Suze Orman or Dave Ramsey on the subject, see what Suze Orman says and what Dave Ramsey says.
If most of your answers point the same way, you'll know. If they don't, let's talk.
Yes. You keep the title. See Do I still own my home if I get a reverse mortgage?
No. Your existing mortgage is paid off from the loan at closing.
Generally no. Needs-based benefits like Medicaid and SSI can be affected if you hold onto large amounts. See Will a reverse mortgage affect my Social Security or Medicare?
Loan money is generally not taxable income. Ask your tax advisor.
Yes, any time. The loan is paid off from the sale, and you keep what's left.
Yes. See Can reverse mortgages be paid off at any time?
You can't outlive a HECM in the sense of being forced out for living too long. As long as you live in the home and meet the loan terms, you can stay. See If I outlive my life expectancy, can I be evicted?
You can start the conversation early. See I will be 62 in 4 months. Can I start the process today?
Browse all our reverse mortgage questions or the Reverse Mortgage Glossary.
Read what you need, skip what you don't, and then let's look at your real numbers. Get your estimate, start your reverse mortgage review, or call us at 530-888-6000. Bring your family. Bring your questions. That's what I'm here for.
ZYNG Mortgage, Inc., NMLS #76801. A reverse mortgage has no required monthly mortgage payments and uses your home's equity. Fees, mortgage insurance and other costs can be added to the loan balance, and the balance grows over time as interest is added, so your equity typically decreases. When the loan becomes due, the home may need to be sold, or the loan repaid from other funds. Interest is not tax-deductible until it is paid, in part or in full. You keep title to your home and must keep paying property taxes, homeowners insurance and upkeep, and meet the other loan terms; not doing so can make the loan due and could lead to foreclosure.
This material is not from HUD or FHA and was not approved by HUD or a government agency.
HECM count at the top of this page: HUD data through September 2026 (source, opens in a new tab).
