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A reverse mortgage, specifically a Home Equity Conversion Mortgage (HECM), is a loan for homeowners aged 62 and older that allows you to convert part of your home equity into cash without selling your home or making monthly mortgage payments. Instead, the loan is repaid when you permanently leave the home, sell it, or pass away. The amount you can borrow depends on your age, home value, current interest rates, and the type of reverse mortgage you choose.

To qualify for a HECM reverse mortgage: (1) You must be at least 62 years old, (2) Own your home outright or have a low mortgage balance that can be paid off with the reverse mortgage proceeds, (3) Live in the home as your primary residence, (4) Not be delinquent on any federal debt, (5) Have the financial resources to pay ongoing property taxes, insurance, and maintenance, and (6) Complete HUD-approved reverse mortgage counseling.

There are five main payment options: (1) Lump Sum: Receive all proceeds at once (only available with fixed-rate loans), (2) Tenure: Equal monthly payments for as long as you live in the home, (3) Term: Equal monthly payments for a fixed period, (4) Line of Credit: Draw funds as needed, with unused portions growing over time, (5) Combination: Mix of monthly payments and line of credit. Most borrowers choose the line of credit due to its flexibility and growth feature.

The amount you can borrow depends on: (1) Your age - older borrowers can access more equity, (2) Current home value and FHA lending limits (up to $1,149,825 in 2026), (3) Current interest rates - lower rates allow higher borrowing amounts, (4) Upfront costs including 2% mortgage insurance premium and closing costs. Typically, borrowers aged 62 can access about 50-55% of home value, while those aged 80+ can access 65-75%. Use our calculator above for a precise estimate based on your situation.

Reverse mortgage costs include: (1) Origination fee: Up to $6,000 or 2% of first $200k plus 1% of amount over $200k, (2) Upfront MIP: 2% of home value, (3) Annual MIP: 0.5% of outstanding balance, (4) Closing costs: Appraisal ($400-800), title insurance, recording fees, (5) Servicing fees: Monthly fee for loan administration (up to $35). These costs can be financed into the loan, reducing your net proceeds but requiring no out-of-pocket payment.

Yes! You retain the title and ownership of your home with a reverse mortgage. You're responsible for property taxes, homeowners insurance, HOA fees (if applicable), and home maintenance. You can live in your home for as long as you wish, provided you meet these obligations. The loan becomes due when you permanently move out, sell the home, or pass away. Your heirs can then choose to repay the loan and keep the home, or sell the home to repay the loan.

When you pass away, your heirs have several options: (1) Pay off the reverse mortgage balance and keep the home, (2) Sell the home and use proceeds to repay the loan, keeping any remaining equity, (3) Turn the home over to the lender if the loan balance exceeds the home value. HECM loans are non-recourse, meaning neither you nor your heirs will owe more than the home's value, even if the loan balance is higher. Your heirs typically have 6 months (with possible extensions) to decide and complete the transaction.

You can lose your home if you fail to meet loan obligations: (1) Not paying property taxes, (2) Not maintaining homeowners insurance, (3) Failing to maintain the property, (4) Not living in the home as your primary residence for more than 12 consecutive months. As long as you meet these requirements, you cannot be forced to leave your home, regardless of how long you live there or how large the loan balance grows. There are no monthly mortgage payments required.

The line of credit growth feature is unique to reverse mortgages. Any unused portion of your line of credit grows at the same rate as the loan's interest rate plus the 0.5% annual MIP. For example, with a 6.5% interest rate, your unused line of credit grows at 7% annually. This means if you have $200,000 available but don't use it immediately, it could grow to approximately $387,000 in 20 years (assuming no draws and consistent rates). This growth is guaranteed regardless of home value changes.

It depends on your situation: Reverse Mortgage Advantages: No monthly payments, can't be canceled by lender, line of credit grows over time, FHA-insured protection. HELOC/Home Equity Loan Advantages: Lower costs, available to younger borrowers, potentially lower interest rates. A reverse mortgage is often better if you're 62+, want to eliminate monthly payments, plan to stay in your home long-term, and have limited retirement income. HELOCs are better for younger borrowers with steady income who can afford monthly payments and want lower overall costs.