Reverse Mortgage FAQ
Every Common Question, Answered in Plain English

Getting started

Who qualifies for a reverse mortgage?

You must be 62 or older, own a home (or have significant equity), and live in the home as your primary residence. The property must meet FHA standards — most single-family homes, townhomes, FHA-approved condos, and qualifying manufactured homes are eligible. There's no minimum credit score, but a financial assessment evaluates your ability to pay property taxes and insurance.

How much can I borrow?

It depends on three factors: your age (older = more), your home's appraised value (up to the $1,249,125 FHA cap), and current interest rates. The calculation uses Principal Limit Factor tables. Use our calculator for a quick estimate based on your numbers.

Is counseling required?

Yes. Before you can apply, you must complete a session with a HUD-approved independent counselor. The counselor explains how the loan works, reviews your financial situation, and ensures you understand the terms and alternatives. It typically takes about an hour and costs around $125 — sometimes covered by the lender or available for free.

How the money works

How do I receive the funds?

You choose the method that fits your needs: a lump sum (available with a fixed rate), a monthly payment for a set period or for life, a line of credit you draw from as needed, or a combination. Most borrowers choose the line of credit for its flexibility and guaranteed growth feature.

Are the proceeds taxable?

No. HECM proceeds are loan advances, not income, so they're not subject to income tax. Interest on the loan is deductible but only when the loan is repaid — not as it accrues. For details, see our tax guide.

Can I use the money for anything?

Yes. There are no restrictions on how you use HECM funds. Common uses include paying off debt, home renovations, funding care, supplementing retirement income, or simply building a financial safety net.

Costs and rates

What are the upfront costs?

The main upfront costs are the initial mortgage insurance premium (2% of your home's value or the lending limit, whichever is less), origination fees (up to $6,000), and standard closing costs (appraisal, title, recording). Most costs can be financed into the loan.

What ongoing costs are there?

An annual mortgage insurance premium of 0.50% accrues on your loan balance, and interest accrues on the amount you've borrowed. You're also responsible for property taxes, homeowner's insurance, and basic home maintenance — the same obligations you have as a homeowner with or without a reverse mortgage.

Fixed or adjustable rate — which is better?

Most borrowers choose adjustable rate — not for the rate itself, but for the flexibility. Adjustable-rate HECMs offer the line of credit option with its growth feature, monthly payment options, and the ability to draw funds over time. Fixed-rate HECMs require a lump-sum draw at closing.

Ownership and protections

Do I still own my home?

Yes. Your name stays on the title. The lender holds a lien — the same as any mortgage. You can sell the home, renovate it, or leave it to your heirs at any time. Read more: Can the bank take my home?

Can I owe more than my home is worth?

You can never owe more than the home's fair market value at the time of sale. This is the FHA's non-recourse protection. If the loan balance exceeds the home's value, FHA insurance covers the difference. Your heirs will never be responsible for a shortfall.

What about my spouse?

If both spouses are 62+, both can be borrowers on the HECM. If one spouse is under 62, they can be designated as a non-borrowing spouse with protections that allow them to remain in the home for life if the borrowing spouse passes away or enters long-term care.

Life changes

What if I need to move?

You can sell the home at any time. The HECM is repaid from the sale proceeds, and you keep any remaining equity. There's no prepayment penalty. More details: What if I need to move?

What if I go into a nursing home?

If you're the sole borrower and leave the home for 12 consecutive months, the loan becomes due. If you have a spouse living in the home (as a co-borrower or non-borrowing spouse), they can stay. Full details: The nursing home rule.

Can I refinance a reverse mortgage?

Yes. If your home has appreciated, rates have dropped, or you need to add a spouse to the loan, refinancing a HECM into a new one may make sense. The same net tangible benefit test applies.

Does a reverse mortgage affect my credit?

A HECM doesn't appear on your credit report like a traditional mortgage. Since there are no required monthly payments, there's nothing to report as late or missed. It generally has no negative impact on your credit score.

For families and heirs

What do my heirs need to know?

When you pass away, your heirs have options: sell the home and keep any equity above the loan balance, pay off the HECM (typically by refinancing) and keep the home, or walk away with no financial obligation. They have at least 6 months, extendable to 12, to make their decision. More: What happens when you die.

Will there be anything left for my kids?

In most cases, yes. The loan balance grows over time, but home appreciation often offsets much of that growth. Strategic borrowing — especially using the line of credit only as needed — preserves more equity. See: Protecting your inheritance.

Still have questions?

A reverse mortgage is a complex product, but the core concept is simple: it lets you access your home equity while staying in your home with no monthly mortgage payment. The program has strong federal protections, and it's worth understanding whether it fits your retirement goals.

Have a question that wasn't answered here? Reach out directly — I'm happy to walk you through the specifics for your situation. Or start with the calculator to see what the numbers might look like.