Key takeaways
- Applying involves confirming eligibility, completing a HUD-approved counseling session, choosing a lender, completing an appraisal and underwriting, and finalizing the loan at closing.
- A reverse mortgage loan may allow eligible homeowners to access part of their home equity.
- The two main types are the Home Equity Conversion Mortgage (HECM), federally insured by the FHA, and proprietary reverse mortgages, which are private loans with terms and age requirements set by the lender.
If you’ve been paying for your home for years, you may have built significant equity. A reverse mortgage is one way to access that value—through a loan designed for eligible homeowners who want to turn part of their home equity into usable funds without selling their home or taking on additional mortgage payments.
The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the homeowner does not meet these loan obligations, then the loan will need to be repaid.
For some, a reverse mortgage may help create more financial flexibility in retirement—whether that means covering expenses, making home improvements, or just having an extra financial cushion. Of course, it’s still a major loan, and like any mortgage, there’s a process (and yes, plenty of paperwork) involved.
There are two main types of reverse mortgages: the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA), and proprietary reverse mortgages, which are private loans offered by some lenders. Both allow you to access home equity, but their age requirements, loan limits, and terms differ.
This guide walks you through the reverse mortgage application process step by step—so you’ll know exactly what to expect from the first conversation to the final signature.
→ Learn more about how HECMs work and loan qualification requirements.
Step-by-step guide on how to apply for a reverse mortgage loan
Applying for a reverse mortgage loan takes time, but it’s a fairly straightforward process once you know what to expect. The steps are designed to make sure you understand the loan terms and eligibility requirements so you may feel confident about your decision.
The general process is similar for both HECM and proprietary mortgages, though details may vary depending on the lender, your state, and the specific loan product.
Step 1. Determine your eligibility
Before applying, it’s important to confirm whether you meet the eligibility requirements for a reverse mortgage. To be eligible for a reverse mortgage, you must, at a minimum, meet the following criteria:
- Age: At least one borrower must be 62+ for a HECM; some proprietary loans may be available to borrowers as young as 55, depending on the lender and loan type.
- Homeownership: You must own your home and have significant equity, usually around 50% or more.
- Primary residence: The property must be your principal residence, meaning you must live in it most of the year.
- Property type: Eligible homes include single-family houses, 2–4 unit properties (if you live in one unit), and some HUD-approved condominiums or manufactured homes that meet FHA standards.
- Financial assessment: Lenders review your ability to pay property taxes, homeowners insurance, and maintenance to keep the loan in good standing. Failure to meet the loan obligations will trigger the loan to become due.
- Federal debt: You cannot have delinquent federal debt such as federal taxes or federally backed student loans.
To learn more, please visit the CFPB’s Reverse Mortgage: A Discussion Guide.
Step 2. Attend a reverse mortgage counseling session
Before submitting a formal application, borrowers applying for a HECM are required by HUD to attend an independent counseling session with a HUD-approved housing counselor. Many proprietary reverse mortgages also have this requirement, however it may vary by state and loan type.
- Scheduling your session: You may complete counseling over the phone or in person. Your lender will provide a list of approved agencies, or you can find one directly at hud.gov/counseling.
- What to expect: The counselor reviews your financial goals, explains loan terms and obligations, and discusses alternatives such as downsizing or refinancing.
After the session, you’ll receive a counseling certificate valid for 180 days. This document is required before your lender can process your application.
Step 3. Choose a lender and complete the application
Once counseling is complete, you may start comparing lenders. Not all lenders offer the same loan options, so look for one that fits your needs. Ideally, your lender should be transparent about fees, timelines, and communication.
- Compare lenders: Review interest rates, closing costs, and available disbursement options (such as a line of credit or monthly payments). It’s okay to ask questions—reverse mortgages are a major financial decision.
- Gather documents you’ll need: Government issued ID, proof of income and assets, mortgage statements or property taxes, homeowners insurance declarations page, and your counseling certificate.
- Complete your application: Your lender may review your financial profile, confirm that you meet eligibility requirements, and begin preliminary loan disclosures.
During this stage, communication with your loan officer is essential. They’ll guide you through the paperwork and answer questions about costs or eligibility.
Step 4. Home appraisal and underwriting
Next, your lender orders a home appraisal to determine your property’s current market value, which plays a key role in calculating how much you may be eligible to borrow. This is generally an out-of-pocket expense you’ll need to cover. Here’s how this generally proceeds:
- Appraisal process: A licensed appraiser visits your home, assesses its condition, and reviews comparable sales in your area. You’ll receive a copy of the report once it’s complete.
- Underwriting review: The lender’s underwriting team evaluates the appraisal, your financial documentation, and all other requirements. They verify that your property meets FHA standards (for HECMs) or lender requirements (for proprietary loans).
Your age, interest rate, and home value may determine the maximum amount of home equity you could access. If additional documentation is needed, your loan officer will likely contact you before the file moves to closing.
Step 5. Closing on your reverse mortgage loan
Once underwriting is complete and your loan is approved, you’ll move to the closing stage. This is when you finalize your loan and choose how to receive your funds.
- Signing final documents: At closing, you’ll review the loan agreement, payment plan, and disclosures. Your lender will walk you through each document, but be sure to ask questions if anything is unclear.
- Choosing your loan disbursement option: You may receive funds as a lump sum, monthly payments, a line of credit, or a combination, depending on the product. Your lender will confirm when and how the funds will be available.
- After closing: HECMs include a three-business-day rescission period, giving you time to cancel if you change your mind. Once that period ends, the lender disburses the funds according to your selected option. Proprietary reverse mortgage loans may not have this requirement.
Note: The process and timing may vary by state, lender, and loan type. Your loan officer may provide an estimated timeline and will likely keep you informed at each step.
Additional considerations for reverse mortgage borrowers
Applying for a reverse mortgage isn’t a decision to be taken lightly. Here are a few other factors and responsibilities to be aware of.
Financial assessment and ongoing responsibilities
Before approving your loan, your lender will conduct a financial assessment to ensure you can pay ongoing property charges, such as property taxes, homeowners insurance, and home maintenance. Some borrowers may be required to set aside a portion of the loan proceeds in a Life Expectancy Set-Aside (LESA) to cover these costs.
Failure to keep up with these payments or maintain the home could cause the loan to become due, meaning you must repay the loan balance.
Non-recourse loan feature
Most reverse mortgages, including HECMs, have a non-recourse clause. This means you or your heirs will never owe more than the home’s appraised value when the loan is due and the house is sold, even if the loan balance exceeds that amount.
To retain ownership and avoid default, you must meet all loan obligations. This includes living in the property as your principal residence, paying ongoing property charges such as taxes, insurance, and any applicable fees, and keeping the home in good condition. If these obligations are not met, the loan will become due and payable.
Alternatives to reverse mortgages
Before deciding to get a reverse mortgage, consider other alternatives such as home equity loans, home equity lines of credit, refinancing your current mortgage, or downsizing to reduce expenses. A financial advisor or housing counselor may help you explore these options.
Find out how much you could be eligible for
Applying for a reverse mortgage loan is a structured, step-by-step process designed to help you make an informed financial decision. From confirming eligibility and completing counseling to choosing your lender and finalizing the loan, each stage ensures that you fully understand your options before moving forward.
With clear expectations and guidance from your lender, you may move confidently from application to closing. If you’re ready to explore whether a reverse mortgage could help you meet your financial goals, start by speaking with a HUD-approved counselor and use our reverse mortgage calculator to estimate how much home equity you may be able to access.
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