Reverse Mortgage FAQ
Answers to the most common questions about reverse mortgages, HECMs, and how they work.
General
What is a reverse mortgage?
A reverse mortgage is a loan that lets homeowners 62 and older access their home equity without selling or making monthly mortgage payments. The loan is repaid when you no longer live in the home (e.g., you move or pass away). The most common type is the FHA-insured HECM (Home Equity Conversion Mortgage), which is regulated by HUD and requires independent counseling.
How does a reverse mortgage work?
A reverse mortgage lets you access the equity you've built in your home as cash — based on your age, home value, and interest rates. You keep title to your home and typically don't make monthly mortgage payments. Interest and fees accrue on the loan balance over time, which reduces home equity. You must still pay property taxes, homeowners insurance, and keep the home in good repair. As long as you meet those obligations and live in the home as your primary residence, the loan is not due.
Who qualifies for a reverse mortgage?
You must be 62 or older (the youngest borrower or eligible non-borrowing spouse determines eligibility), live in the home as your primary residence, and have sufficient equity. You'll need to complete HUD-approved counseling and a financial assessment to ensure you can meet ongoing obligations like property taxes and insurance. The home must meet FHA property standards.
What types of reverse mortgages are there?
The most common is the HECM (Home Equity Conversion Mortgage), which is FHA-insured and available through FHA-approved lenders. There are also proprietary reverse mortgages offered by some private lenders for higher-value homes, and single-purpose reverse mortgages offered by state or local agencies for specific uses (e.g., property taxes). HECMs offer the most flexibility and consumer protections.
Is a reverse mortgage a good idea?
It depends on your situation. A reverse mortgage can be a good fit if you plan to stay in your home long-term, want to eliminate monthly mortgage payments, need a financial safety net, or want to supplement retirement income. It may not be ideal if you plan to move soon, want to leave your home debt-free to heirs, or have very low equity. HUD-approved counseling helps you decide based on your goals.
Important: Reverse mortgages are loans secured by your home. No monthly mortgage payments are required; however, borrowers must continue to pay property taxes, homeowners' insurance, and maintain the home. The loan becomes due when the borrower sells the home, moves out permanently, or passes away. Failure to meet loan obligations may result in the loan becoming due and payable.
Financial
How much money can I get from a reverse mortgage?
The amount depends on your age (youngest borrower), your home's value (capped by the annual HECM lending limit, which is $1,249,125 for 2026), current interest rates, and any existing mortgage. Older borrowers and higher home values generally mean more available proceeds. Our calculator gives you an estimate with no personal info required.
How much does a reverse mortgage cost?
Typical costs include an origination fee (often 2% of the first $200,000 of value, then 1% above that, with caps), an upfront FHA mortgage insurance premium (2% of the max claim amount), plus third-party costs like appraisal, title, and recording. These are usually financed into the loan rather than paid out of pocket. Your loan officer can provide a detailed breakdown before you apply.
Are reverse mortgage proceeds taxable?
Generally no. The money you receive from a reverse mortgage is loan proceeds, not income, so it is typically not taxable. However, tax rules can vary by situation (e.g., if you use proceeds to buy an annuity). We recommend consulting a tax professional for your specific circumstances.
How are reverse mortgage interest rates determined?
HECM interest rates are typically tied to a financial index (such as the Secured Overnight Financing Rate or SOFR) plus a margin set by the lender. Rates can be fixed (for lump-sum disbursement only) or adjustable. Your rate affects how much you can borrow and how quickly the loan balance grows. Your loan officer will explain the options available to you.
What is the line of credit growth feature?
If you choose a HECM line of credit, the amount you don't use can grow over time at a rate tied to the loan's interest rate plus the ongoing mortgage insurance premium. That means your available credit can increase even if you don't draw more — a valuable option for many retirees who want a growing financial safety net without using the funds right away.
Can I make payments on a reverse mortgage?
Yes. You are not required to make monthly payments, but you may choose to pay down the loan balance (e.g., interest, principal, or both). Making payments can help preserve more equity for you or your heirs. There are typically no prepayment penalties on HECMs. Your servicer can explain how to make voluntary payments.
Important: Reverse mortgage line of credit growth is a feature of the HECM program. The unused portion of the line of credit may grow over time, but please note that interest and mortgage insurance premiums accrue on any amounts borrowed and are added to the loan balance, which reduces home equity.
Property & Ownership
Do I still own my home with a reverse mortgage?
Yes. You remain the owner of your home and keep the title. The lender has a lien on the property, but you retain ownership and can live in the home as long as you meet the loan terms: using it as your primary residence, paying property taxes and insurance, and maintaining the property. You can sell the home at any time and use the proceeds to pay off the loan.
Can I get a reverse mortgage on a condo?
Yes, in many cases. The condo must be FHA-approved — either the project must be on the FHA condominium approval list or meet FHA eligibility criteria. Some condos are not yet approved; your lender can help you check. Single-family homes, two-to-four unit properties (you must occupy one unit), and FHA-approved manufactured homes also qualify.
Can I get a reverse mortgage on a manufactured home?
Yes, if it meets FHA requirements. The home must be permanently attached to a foundation, be classified as real property (not personal property), and meet HUD's Manufactured Home Construction and Safety Standards. Not all manufactured homes qualify; your lender can confirm whether your home is eligible.
What if my home value drops below the loan balance?
With an FHA-insured HECM, you and your heirs are protected. FHA insurance ensures that when the loan is repaid (e.g., when you sell or the last borrower leaves the home), you or your estate will never owe more than the home's value. If the loan balance exceeds the home value, FHA insurance covers the shortfall. This is a key consumer protection of the HECM program.
Can I rent out my home with a reverse mortgage?
No. A HECM requires that the home be your primary residence. You must live in the home for the majority of the year. If you move out permanently (e.g., to a care facility or another home), the loan becomes due and payable. Renting out the property and living elsewhere would violate the loan terms.
Important: West Capital Lending, Inc. is not affiliated with, acting on behalf of, or endorsed by HUD, FHA, or any other government agency. The Home Equity Conversion Mortgage (HECM) program is administered by the U.S. Department of Housing and Urban Development (HUD), but this information is not provided by HUD or any government agency.
Family & Heirs
What happens to my reverse mortgage when I die?
When the last borrower (or eligible non-borrowing spouse) passes away, the loan becomes due and payable. The servicer will contact the estate or heirs. They typically have options: sell the home and use the proceeds to pay off the loan (keeping any remaining equity), refinance the loan into a forward mortgage to keep the home, or deed the property to the lender in lieu of foreclosure if there is insufficient equity.
How does a reverse mortgage affect my heirs?
Your heirs inherit the home subject to the reverse mortgage. They can sell the home and keep any equity after the loan is paid off, or they can refinance or pay off the loan to keep the home. Because of FHA insurance, they will never owe more than the home's value at the time of repayment. They are not personally liable for any shortfall.
What if my spouse is younger than 62?
If your spouse is under 62 and not on the loan, they may be protected as an eligible non-borrowing spouse under HECM rules. In that case, they can remain in the home after you pass away without the loan becoming due, as long as they meet certain requirements (e.g., they were married at closing and remain on the title). Rules have changed over time; your counselor and lender will explain what applies to your situation.
Can my children inherit the home?
Yes. When you pass away, your children (or other heirs) can inherit the home. They will need to pay off the reverse mortgage — by selling the home and using the proceeds, or by refinancing or paying the balance if they want to keep it. They cannot be required to pay more than the home's value (or 95% of appraised value in some cases) thanks to FHA insurance.
Important: Reverse mortgages are loans secured by your home. Borrowers must continue to pay property taxes, homeowners' insurance, and maintain the home as a primary residence.
Process
What is HUD-approved counseling?
Before you can get a HECM, you must complete a session with a HUD-approved housing counselor. The counselor is independent of the lender and helps you understand how reverse mortgages work, the costs, alternatives, and whether a reverse mortgage fits your situation. The counseling is required by law to protect you. There is usually a fee, which may be waived in some cases.
How long does it take to get a reverse mortgage?
From application to closing typically takes 30 to 45 days, sometimes longer depending on the lender, appraisal, title, and financial assessment. You'll need to complete counseling first, then the application, appraisal, underwriting, and closing. Your loan officer can give you a more specific timeline based on your situation.
What is a financial assessment for a reverse mortgage?
Lenders are required to evaluate your ability to meet ongoing obligations such as property taxes, homeowners insurance, and property maintenance. If the assessment shows a shortfall, the lender may set aside funds from your principal limit to pay these items (called a Life Expectancy Set-Aside or LESA). This helps ensure you can stay in your home and avoid default.
Can I refinance a reverse mortgage?
Yes. You can refinance a HECM into a new HECM (or, in some cases, into a forward mortgage) if it benefits you — for example, if your home value has increased, you've aged, or rates have changed and you qualify for more proceeds. You'll go through counseling and underwriting again. Refinancing has costs, so it only makes sense when the benefit outweighs them.
Comparison
Reverse mortgage vs. HELOC — which is better?
It depends on your age and goals. A HELOC (home equity line of credit) typically requires monthly payments and can be frozen or reduced by the lender. A reverse mortgage line of credit usually has no required monthly payments and has a growth feature. For homeowners 62+ who want to tap equity without monthly payments and may use the line as a long-term safety net, a HECM line of credit is often worth considering. For shorter-term needs and if you're under 62, a HELOC may be more appropriate.
Reverse mortgage vs. selling my home
Selling means you give up ownership and must move; a reverse mortgage lets you stay and access equity. Selling can make sense if you want to downsize, relocate, or prefer not to have a loan. A reverse mortgage can make sense if you want to stay in your current home, eliminate mortgage payments, or use a line of credit without selling. Your counselor can help you compare the options for your situation.
Reverse mortgage vs. downsizing
Downsizing (selling and moving to a smaller or less expensive home) frees up equity and may reduce expenses, but it requires moving and has transaction costs. A reverse mortgage lets you stay put and access equity without moving. Some people use a HECM for Purchase to downsize and buy a new home with a reverse mortgage — no monthly mortgage payments on the new home. The right choice depends on whether you want to stay or move and how you want to use your equity.
Ready to see your numbers?
Use our calculator to estimate how much you could access, or schedule a free consultation with Jerry.