Reverse Mortgage Closing Costs
Every Line Item, Explained
JP Dauber · Licensed HECM Specialist
NMLS# 386298 · Published August 21, 2026
The origination fee
This is what the lender charges to process the loan. By law it is capped: 2% of the first $200,000 of your home's value plus 1% of the value above that, with a maximum of $6,000 and a minimum of $2,500.
Because it is capped, the origination fee does not climb endlessly with home value the way a percentage-only fee would.
FHA mortgage insurance
The upfront FHA mortgage insurance premium is 2% of your home's value up to the lending limit. There is also an annual premium of 0.50% charged on the loan balance over time.
This insurance is what funds the program's core protections — the non-recourse guarantee and the assurance you receive your funds even if the lender fails.
Key fact
Most closing costs can be financed into the loan rather than paid out of pocket. That keeps cash in your pocket at closing, though financing costs means they accrue interest over time like the rest of the balance.
Third-party costs
These are paid to outside parties, not the lender: the appraisal fee, title search and title insurance, escrow or settlement fees, recording fees, and any required inspections.
They are similar to the third-party costs on any mortgage and vary by location and home.
The counseling fee
Required HUD-approved counseling typically costs about $125 to $200. It can sometimes be waived for hardship, and it is often the only cost you pay before closing.
Everything else is generally settled at or financed into closing.
Putting the costs in context
Reverse mortgage closing costs are higher than a simple HELOC, but you are buying something different — no monthly payment, a protected and growing line of credit, and federal guarantees. Whether the cost is worth it depends on how you will use the loan and how long you will stay.
Want a real cost estimate for your home? Try the calculator or reach out for a personalized breakdown.
Keep reading
The complete guide
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