1,401,176 HECM reverse mortgages insured by FHA since 1989.
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Reverse mortgage guide
The FHA-insured reverse mortgage, the HECM, has changed many times since the first one closed in 1989. The biggest shifts came in 2008, when Congress set one national lending limit, and between 2013 and 2017, when HUD limited first-year draws, protected younger spouses, added a financial assessment, and repriced mortgage insurance. Since then, the lending limit has climbed with home prices and adjustable loans moved off LIBOR. If you're reading an older article, check its date, because many of the rules it describes are gone. This page walks through each change, what it meant for borrowers, and the HUD source behind it.
Reverse mortgages have been around a lot longer than most people think, and the program you'd sign up for today isn't the one your neighbor got in 2008. The limits are different. The costs are different. The protections for spouses are completely different.
That matters for one simple reason: the internet never forgets. You can still find articles, forum posts, and well-meaning advice from people describing rules that went away a decade ago. If you're reading something about reverse mortgages, the first question to ask is when it was written.
This page walks through the history of the FHA-insured reverse mortgage, the HECM, year by year. For each change, I'll tell you what HUD did, why it mattered to borrowers, and where the rule came from. For today's lending limit and the full year-by-year list of limits, see Lending Limits.
The story most of the industry tells starts in Portland, Maine. A savings and loan officer named Nelson Haynes wrote a loan for Nellie Young, the widow of his high school football coach, so she could stay in her home. It wasn't insured by anyone. It was just a banker trying to help a neighbor.
Through the 1970s and early 1980s, researchers and policymakers kept looking at the same problem: a lot of older homeowners had most of their wealth in a house and very little income. A few private programs tried to fill the gap, but without federal insurance, lenders were nervous about loans with no fixed payoff date.
The Housing and Community Development Act of 1987 authorized HUD to insure reverse mortgages through FHA as a demonstration program. President Reagan signed it in February 1988. This is where the name "Home Equity Conversion Mortgage" comes from.
Why it mattered: FHA insurance is the reason reverse mortgages became available to ordinary homeowners. It protects the lender if the loan grows larger than the home is worth and, just as important, it means your advances keep coming even if your lender can't pay them. That's also why an adjustable-rate HECM still has two notes and two deeds of trust.
The first HECM is widely reported to have gone to Marjorie Mason of Fairway, Kansas, through the James B. Nutter Company of Kansas City. Volume was tiny for years. Lenders and borrowers were both feeling their way through a brand-new product.
Congress required lenders to disclose the Total Annual Loan Cost, or TALC, on reverse mortgages. The TALC shows the yearly cost of the loan, fees and all, over different time periods. It's still on every reverse mortgage disclosure today. Read What Is the TALC?
Why it mattered: It gave borrowers one apples-to-apples way to compare loans, and it showed in plain numbers that upfront costs matter most on a short loan.
HUD allowed HECMs on one-to-four unit homes, as long as the borrower lives in one of the units. Industry histories report that lender participation peaked around 1997, then dipped for a couple of years.
The demonstration ended. Congress made the HECM a permanent program and funded counseling and consumer education.
HUD let lenders charge an origination fee of up to a flat dollar amount or a percentage of the maximum claim amount, whichever was greater. Before HERA capped it in 2008, that fee could get large on expensive homes.
HUD and AARP began testing and training HECM counselors. Counseling had been required from the start, but this is where it started to look like the standardized session you'd attend today. See Reverse Mortgage Counseling and 10 Questions To Know For Reverse Mortgage Counseling.
FHA published rules for refinancing one HECM into another. That opened the door for borrowers to tap rising home values or a higher lending limit later. See Reverse Mortgage Refinance.
Through this period, how much a HECM could lend depended on your county's FHA limit. Two identical homes in different counties could get very different amounts.
You'll see older articles, including my own old history page, say the national limit was set in 2006. Here's where that confusion comes from. In 2006, the national conforming loan limit for Fannie Mae and Freddie Mac was set at the same dollar amount the HECM limit would later start at. But the single national HECM limit didn't exist until Congress created it in the Housing and Economic Recovery Act of 2008, and HUD put it into effect that fall. So the right answer for the HECM is 2008.
HERA changed the HECM in several big ways:
2008 is also the year the first baby boomers turned 62.
Why it mattered: The higher limit helped borrowers in expensive markets. The 10 percent cut was the first sign that HUD would trade borrower proceeds for the health of the insurance fund when it had to.
For case numbers assigned on or after October 4, 2010, HUD offered two versions of the HECM:
At the same time, annual mortgage insurance went up, to the same higher rate on both options.
Why it mattered: The Saver made a small, low-cost line of credit possible. It was a great fit for people who wanted a standby fund. It didn't last.
Bank of America and Wells Fargo, two of the largest reverse mortgage lenders, left the business in 2011, and MetLife followed in 2012. Wells Fargo pointed to uncertainty about home values and the risk of foreclosing on older borrowers who fell behind on taxes and insurance. Bank of America cited other business reasons.
Why it mattered: People asked me then if this meant reverse mortgages were going away. They didn't. The market shifted to lenders and brokers that focus on reverse mortgages, and the program kept going. But the exits put pressure on HUD to fix the weak spots, and that's exactly what happened next.
If you only remember one stretch of history, make it this one. Almost everything that makes today's HECM safer came out of these three years.
Starting with case numbers assigned April 1, 2013, the full-draw fixed-rate HECM Standard was ended. Too many borrowers were taking every dollar at closing and running into trouble later.
The Reverse Mortgage Stabilization Act of 2013 let HUD change HECM rules by Mortgagee Letter instead of waiting on a full rulemaking. HUD used that power within weeks.
For case numbers assigned on or after September 30, 2013, HUD:
Why it mattered: This is the change that stopped people from spending everything at 62. It's also why a lump sum today is usually smaller than people expect.
For case numbers assigned on or after August 4, 2014, an eligible non-borrowing spouse can generally stay in the home after the borrower dies, through what HUD calls a deferral period. The younger spouse's age is now part of the math, which lowers the amount available but protects the spouse. See the Non-Borrowing Spouse guide.
HUD said a HECM can only pay off a newer mortgage or line of credit if it's been in place more than 12 months or gave you less than $500. See Reverse Mortgage Lien Seasoning Requirements.
The financial assessment was supposed to start March 2, 2015. HUD pushed it back, and it applies to case numbers assigned on or after April 27, 2015. Since then, lenders review your credit, income, and history of paying property taxes and insurance before approving a HECM. If it looks like you might struggle, part of the loan can be set aside to pay those bills for you, called a Life Expectancy Set-Aside, or LESA.
Why it mattered: In the years before, a lot of HECM defaults came from borrowers falling behind on taxes and insurance. The financial assessment was HUD's answer. I think of it as protection for you, not a hurdle. See Reverse Mortgage Financial Assessment.
HUD published a final rule called "Strengthening the Home Equity Conversion Mortgage Program" in the Federal Register on January 19, 2017. It wrote many of the 2013 to 2015 changes, from first-year limits to the financial assessment, into permanent regulation.
After eight years at the same figure, the national limit rose for 2017. See Lending Limits for each year's figure.
For case numbers assigned on or after October 2, 2017, HUD made three changes at once:
I wrote about it at the time, and here's the honest summary. If you planned to take most of your money up front, upfront costs went down. If you wanted a line of credit and planned to take very little, upfront costs went up a lot. Almost everyone got less money to start, but a balance that grows more slowly. For today's mortgage insurance, see Reverse Mortgage Costs.
Since 2017, the HECM limit has gone up every year, because it's tied to 150 percent of the national conforming limit. See Lending Limits for each year's figure.
HUD began a collateral risk assessment that can require a second appraisal when the first one looks high. See Is there a situation where I would need 2 appraisals?
HUD allowed single-unit approval for condos, so your unit can qualify even if the whole complex isn't FHA-approved. Mortgagee Letter 2019-15 also removed several deadlines and title requirements for surviving spouses on older loans.
For 2023, the HECM lending limit rose to a record high at the time. See Lending Limits for each year's figure.
HUD's final rule took effect March 31, 2023. Existing HECMs tied to LIBOR moved to a SOFR-based index after June 30, 2023.
Mortgagee Letter 2023-23 updated how servicers handle occupancy certifications, assignments to HUD, loss mitigation, and annual check-ins for eligible non-borrowing spouses.
The limit, mortgage insurance, and other program figures change, and they come from our reference data so they're always current. See Lending Limits, Reverse Mortgage Costs, and Today's Reverse Mortgage Rates.
If you find an article online, here are signs it's out of date:
That's also why I'd take an old opinion with a grain of salt. Some of the best-known critics, like Suze Orman and Dave Ramsey, built their views on rules that have since changed.
The first known private reverse mortgage was written in 1961 in Portland, Maine. The FHA-insured HECM was created by Congress in the Housing and Community Development Act of 1987, which became law in 1988, and the first one closed in 1989.
In 1998, when Congress made it a permanent federal program.
In 2008, under the Housing and Economic Recovery Act. Before that, limits varied by county.
A version of the HECM offered from October 2010 to September 2013 with almost no upfront mortgage insurance, in exchange for less available money. It no longer exists.
For HECMs with case numbers assigned on or after August 4, 2014. HUD expanded them again in 2019 and 2021.
For case numbers assigned on or after April 27, 2015.
Upfront mortgage insurance became the same for everyone, annual mortgage insurance went down, and principal limits went down for most borrowers. For today's figures, see Reverse Mortgage Costs.
Usually not. Most HECM rules apply based on when your FHA case number was assigned. Some servicing and spouse rules have been applied to older loans too. If you're not sure which rules apply to your loan, I'm glad to look.
Rules change, and they can change your options. If you looked at a reverse mortgage years ago and it didn't work, it may be worth another look. Higher limits, a different cost structure, or a spouse who has since turned 62 can all change the answer.
Get your estimate, read How a Reverse Mortgage Works, or call us at 530-888-6000. I'm glad to tell you which rules apply to your situation today.
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).
