Reverse Mortgage and Property Taxes
Your Obligation — and the Tools That Help
JP Dauber
NMLS# 386298 · Published May 27, 2026
Why property taxes matter with a HECM
A reverse mortgage eliminates your monthly mortgage payment — but it doesn't eliminate property taxes. You still owe them, just like any homeowner. The difference is that failing to pay property taxes on a HECM home can have more immediate consequences than with a traditional mortgage.
FHA requires that you stay current on property taxes as a condition of the loan. If you become delinquent, the servicer will contact you, and if the situation isn't resolved, the loan can be called due. This is rare — but it's the rule, and understanding it upfront helps you plan.
How to handle property taxes with a HECM
Pay from your own funds
Most borrowers simply pay property taxes from Social Security, pension, or savings — the same way they always have. Without a mortgage payment, the freed-up cash flow often more than covers taxes.
Use your HECM line of credit
If you have an adjustable-rate HECM with a line of credit, you can draw from it to pay property taxes. This is flexible — draw only when tax bills arrive.
Set up a LESA
A Life Expectancy Set-Aside automatically reserves a portion of your HECM to pay taxes and insurance. Payments happen automatically — you never have to think about it. This reduces your available equity but eliminates the risk of falling behind.
Senior property tax exemptions by state
Most states offer some form of property tax relief for seniors. These exemptions remain in effect with a HECM — a reverse mortgage doesn't change your tax status. Here are examples in the states we serve:
Homestead Exemption up to $50,000 off assessed value. Additional exemptions for low-income seniors 65+.
$100,000 school tax homestead exemption. Over-65 school tax freeze that carries over statewide.
Property tax rates well below national average. Additional exemptions for seniors with limited income.
Senior Homestead Exemption: 50% off first $200,000 of actual value for qualifying seniors 65+.
Prop 13 caps tax increases at 2%/year. Prop 19 allows over-55 homeowners to transfer tax base to a new home.
Property Tax Reduction program for qualifying seniors 65+ with household income under certain limits.
Check your county assessor's office for specific eligibility requirements. These exemptions are independent of your HECM.
Taxes don't go away — but HECM helps manage them
Property taxes are an ongoing obligation with a HECM — but they're manageable. The mortgage payment you've eliminated often frees up more than enough to cover taxes comfortably. And if you want extra security, a LESA handles it automatically. Combined with senior exemptions in your state, the tax burden is usually well within reach.
Questions about how property taxes fit into your HECM plan? Reach out — I can walk through the numbers for your specific situation and state.