Reverse mortgages are widely misunderstood. Misinformation can cause people to dismiss a tool that might actually help them — or to rush into one without understanding the rules. Here are 10 common myths and the facts that set the record straight.
Myth 1: The bank owns your home.
Fact: You keep title to your home. The lender has a lien, just like with a forward mortgage. You remain the owner and can sell, refinance, or leave the home to your heirs. You must meet loan obligations (property taxes, insurance, maintenance, primary residence), but the bank does not "own" your house. For more, see our guide for homeowners.
Myth 2: You can be kicked out for no reason.
Fact: You cannot be evicted for simply having a reverse mortgage. The loan becomes due when the last borrower (or eligible non-borrowing spouse) no longer lives in the home — for example, after moving permanently or passing away. As long as you live there and meet the terms (taxes, insurance, maintenance), you can stay. Lenders cannot call the loan due because you've "outlived" the loan or for arbitrary reasons.
Myth 3: Reverse mortgages are only for desperate people.
Fact: Many financially comfortable retirees use HECMs strategically — for example, a growing line of credit as a backup, or to eliminate monthly mortgage payments while staying in place. It's a financial tool, not a last resort. Whether it's right for you depends on your goals and situation.
Myth 4: You or your heirs will owe more than the home is worth.
Fact: FHA-insured HECMs are non-recourse. You and your heirs are never required to pay more than the home's value when the loan is repaid. If the balance exceeds the home's value, FHA insurance covers the shortfall. Your other assets are protected. We cover this in our FAQ on heirs and non-recourse.
Myth 5: Heirs get nothing.
Fact: Heirs keep any equity left after the loan is paid off. They can sell the home (and keep the surplus), refinance to keep it, or pay off the loan. The home is still part of your estate; the loan is simply paid from the proceeds when the property is sold or refinanced. For details, see what happens to a reverse mortgage when you pass away.
Myth 6: Reverse mortgages are scams.
Fact: HECMs are FHA-insured, regulated by HUD, and require mandatory HUD-approved counseling before closing. Lenders must follow federal rules. That doesn't mean every use is right for every person — but the product itself is legitimate and well-regulated. Our licensing page and FAQ outline the safeguards.
Myth 7: You can't sell the home.
Fact: You can sell at any time. The sale proceeds pay off the reverse mortgage; you keep any remaining equity. Many people sell when they relocate or downsize. There's no penalty for selling.
Myth 8: Proceeds are taxable income.
Fact: Reverse mortgage proceeds are loan advances, not income. The IRS does not treat them as taxable income. They also do not affect Social Security or Medicare. For more, read how a reverse mortgage affects Social Security and Medicare.
Myth 9: Reverse mortgages are too expensive.
Fact: There are costs — origination fee, upfront MIP, third-party fees — and they're similar in nature to a refinance. Many of these can be financed into the loan so you don't pay them out of pocket. Whether the cost is "worth it" depends on how you use the loan (e.g., eliminating a monthly payment, securing a growing line of credit). We break down reverse mortgage costs in plain language.
Myth 10: You can only get a fixed amount of money.
Fact: You can choose a line of credit, and the unused portion can grow over time. You're not limited to a single lump sum. You can also receive tenure payments (for life) or term payments (for a set period), or a combination. The flexibility is one of the product's strengths. Our calculator can show you an estimate of what you might access.
Getting the facts helps you decide whether a reverse mortgage fits your retirement plan. If you'd like to see your numbers or talk through your situation, try the calculator or schedule a conversation — no pressure, just clear information.
Have questions about reverse mortgages or want to see how much you might access? Try our calculator or schedule a conversation with Jerry.