How do you get paid with a reverse mortgage?
Five options — and you can change your mind later
JP Dauber, NMLS# 386298
Reverse Mortgage Specialist
Last updated March 15, 2026
Your five choices
You don't just get a check and that's it. You pick how the money comes to you — and with an adjustable-rate loan, you can change your mind later.
Lump sum
Get the full amount at closing. Only available with a fixed rate. Good if you're paying off a big mortgage or have a major expense to cover.
Line of credit
Draw money when you need it. The unused portion grows over time. This is the most popular option — and the one most financial planners recommend.
Tenure payments
Equal monthly payments for as long as you live in the home. Think of it like a pension from your house.
Term payments
Monthly payments for a set number of years. The shorter the term, the bigger each check.
There's also a fifth option: a combination. You can mix a line of credit with monthly payments. For example, keep $50,000 available for emergencies and get $800 a month from the rest.
Why the line of credit is so popular
The HECM line of credit has a feature no other loan offers: the money you don't use grows over time.
Here's how that works. Say you set up a $200,000 line of credit and don't touch it. At a growth rate of 6.5%, that available balance grows to roughly $375,000 after 10 years — even if your home's value doesn't go up at all.
It can't be frozen or taken away
Unlike a HELOC, your lender can never revoke your line of credit. Once it's set up, it's yours — guaranteed by FHA.
You only pay interest on what you use
If you never draw from it, you owe nothing. Interest only adds up on the money you actually take out.
You can switch to monthly payments later
Start with the line of credit and convert to tenure or term payments whenever you want. It costs about $20 to make the change.
This is why many people set up a HECM line of credit early in retirement — even if they don't need money right away. It's a growing safety net that gets bigger the longer you wait.
Fixed rate vs. adjustable rate
Your interest rate type decides which payment options are available to you:
Fixed rate
Lump sum only. One rate for the life of the loan. Simple, but no flexibility to change later.
Adjustable rate
All five options available. The rate changes over time (with caps to protect you), but you get the full range of choices. Most borrowers go this route.
There's a first-year limit
No matter which option you pick, FHA limits how much you can take in the first year to 60% of your total loan amount. So if you qualify for $300,000, you can access up to $180,000 in year one.
The exception: if you're paying off an existing mortgage that's more than 60% of your total, you can draw enough to cover it — plus an extra 10%.
After year one, the rest opens up. This rule exists to keep the HECM working as a long-term tool, not a one-time withdrawal.
Match the option to your goal
If you're not sure what the future holds, the line of credit is the safest starting point. You can draw from it when you need to or switch to monthly payments later. If you want steady income, tenure payments give you a check for life. And if you have one big expense to cover, the lump sum gets it done.
Want to see what each option looks like with your numbers? Try the calculator or schedule a conversation and I'll walk you through your choices.