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Reverse mortgage guide
A HECM reverse mortgage can usually pay off your existing mortgage or home equity line, but a newer loan may first have to "season." Under HUD's rule, a HECM can pay off a lien only if it was in place more than 12 months before your HECM application, or if it gave you less than $500 in total, whether in cash at closing or in later draws. A HELOC opened more than 12 months ago can be paid off even if you drew on it recently. If your lien doesn't qualify yet, you can wait, pay it off with other documented money before closing, or in some cases have it placed behind the HECM. An existing HECM you're refinancing isn't subject to this rule.
When HUD announced this rule in late 2014, I told our clients that change was in the air. It's been the rule ever since, and it still surprises people.
Here's the short of it. A reverse mortgage can pay off the mortgage you already have. That's one of the main reasons people get one. But if that mortgage or home equity line is brand new, and you pulled cash out of it, HUD may make you wait before the HECM can pay it off. That waiting period is called seasoning.
This article explains the rule, the exceptions, what your loan officer will ask for, and what to do if your loan is too new. These rules are for the HECM, the FHA-insured reverse mortgage. Proprietary (jumbo) reverse mortgages set their own rules.
Seasoning is just how long a loan has been on your home. A lien has "seasoned" once it has been in place for more than 12 months before your HECM application.
HUD looks at two things:
Before late 2014, someone could take out a cash-out loan or max out a new HELOC, and then turn around a few weeks later and use a HECM to pay it off. That's a way around the first-year draw limits HUD put in place in 2013, which are meant to keep people from spending all their equity at once.
HUD closed that gap with Mortgagee Letter 2014-21, for HECM case numbers assigned on or after December 15, 2014. You can see how it fits with the other changes from that period on HECM Program Changes by Year.
Here's the question HUD asks about every non-HECM lien a HECM will pay off:
Was this lien in place for more than 12 months before your HECM application?
Did this lien give you less than $500 in total? That counts cash you received at its closing plus any draws you took later.
These are simple examples, not real clients.
You refinanced to a lower rate and didn't take cash. The new loan is less than 12 months old, but it didn't give you $500 or more. No seasoning problem. The HECM can pay it off.
You took $40,000 cash out. The loan is less than 12 months old and gave you more than $500. Seasoning applies. The HECM can't pay it off until the loan passes 12 months before your application, unless you pay it some other way. Often the easiest fix is to wait about two more months and then apply.
The HELOC itself was opened more than 12 months before your application. No seasoning problem, even though you drew on it recently. HELOCs older than 12 months aren't subject to the $500 test.
The HELOC is less than 12 months old, and you've drawn more than $500 from it. Seasoning applies.
You haven't drawn anything. No seasoning problem. Just don't draw on it before closing.
The loan is under 12 months old and gave you more than $500. The reason you borrowed doesn't change the rule, so seasoning applies.
You still have choices.
Once the lien has been in place more than 12 months before your HECM application, it can be paid off at closing. Because the test looks back from your application date, we can often time the application so it lands just past the 12-month mark.
Waiting a few weeks or months is often the simplest answer, especially if nothing is urgent. Keep making your payments in the meantime.
You can pay off the lien yourself, outside of the HECM closing, with money that doesn't come from the reverse mortgage. That could be savings, the sale of an asset, or help from family. Your lender will need to see the payoff, and usually where the money came from, before your loan can be approved.
A regular second mortgage or HELOC generally has to be paid off at closing. In limited cases, such as certain judgment liens or federal debts, a lien may be allowed to stay on the home behind the HECM, if HUD's rules and the lender allow it. That's called subordination. Not every lender will do it, and it has to meet HUD's requirements. You'd keep making payments on that lien.
There's no partial credit here. The $500 test counts what the lien gave you, not what you owe now. Paying the balance down doesn't make a new lien season faster.
When we look at your loans, here's what I'll ask for:
Please don't send these through the website. Your loan officer will tell you what's needed and the safe way to share it.
Call the title company that closed the loan, or the lender or servicer. They can usually send a copy. If it truly can't be found, the lender may not be able to pay that lien from the HECM, and you may need to pay it off another way before closing. Ask early. This is the kind of thing that can hold up a closing.
Lenders can also add their own rules on top of HUD's. I'll tell you if any apply to your loan.
It's HUD's rule that a newer loan on your home must be in place more than 12 months before your HECM application, or have given you less than $500, before the HECM can pay it off.
Generally no. If you didn't get $500 or more from it, it can be paid off even if it's less than 12 months old.
No. A HELOC opened more than 12 months before your application isn't subject to the $500 draw test.
Generally from when the lien closed, as shown on its settlement statement or other records. HUD measures back from the date of your initial HECM application.
Usually, yes. You can wait, pay the lien off with other documented money before closing, or, in limited cases, have it placed behind the HECM.
Not automatically. Proprietary programs set their own rules. I'll check the program's guidelines.
The rule is about liens on a home that the HECM will pay off. On a purchase, the questions are usually about where your down payment comes from. See HECM for Purchase.
That's fine. The title report will show it, and I'll walk you through it.
Seasoning is one of those rules that's easy to handle when we see it early and painful when we find it late. Before you take a draw, open a line, or refinance, call us at 530-888-6000 and we'll look at your loans together. You can also get your estimate or read How a Reverse Mortgage Works.
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).
