Reverse Mortgage Basics

by HUD, U.S. Department of Housing and Urban Development

The Home Equity Conversion Mortgage or FHA-Insured Reverse Mortgage can be used by senior homeowners age 62 and older to convert the equity in their home into monthly streams of income and/or a line of credit to be repaid when they no longer occupy the home. The loan, commonly known as HECM, is funded by a lending institution such as a mortgage lender, bank, credit union or savings and loan association.

Reverse Mortgage Borrower Requirements:

  • Age 62 years of age or older
  • Own your property
  • Occupy your property as primary residence
  • Participation in a consumer information session given by an approved HECM counselor

Reverse Mortgage Amount Based On:

  • Age of the youngest borrower
  • Current interest rate
  • Lesser of appraised value or the FHA insurance limit

Reverse Mortgage Financial Requirements:

  • No income or credit qualifications are required of the borrower
  • No repayment as long as the property is the primary residence
  • Closing costs may be financed in the mortgage

Reverse Mortgage Property Requirements:

  • 1 family home or 1-4 unit home with one unit occupied by the borrower
  • Condominiums or Planned Unit Developments (PUD) must be HUD-FHA approved
  • Cooperatives that meet HUD guidelines
  • Mobile Homes that meet HUD guidelines
  • Meets minimum property standards (borrower may fund repairs in the mortgage)

For more info, check out How HUD’s Reverse Mortgage Program Works.

Copyright HUD, U.S. Department of Housing and Urban Development. For more information, visit the HUD website.