Quick Answer: Yes. In many cases, a reverse mortgage may be refinanced into a new reverse mortgage or into a conventional, forward mortgage. Whether refinancing makes sense depends on factors such as current home value, remaining equity, interest rates, borrower age, and long-term plans for the home.
Key Points
- You can refinance a reverse mortgage, but eligibility and loan requirements vary by loan type.
- Refinancing could be used to help homeowners access more equity, adjust loan terms, add a spouse, or improve cash-flow flexibility.
- Upfront costs, interest rates, impact on remaining equity, and long-term housing plans should be carefully evaluated before considering a refinance.
After getting a reverse mortgage, you may find your financial situation has changed. Maybe your home value has increased, interest rates have gone down, or your retirement plans have shifted. When that happens, it’s natural to wonder whether refinancing your reverse mortgage loan is an option.
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.
What is reverse mortgage refinancing?
Reverse mortgage refinancing replaces an existing reverse mortgage with a new loan that pays off the current balance and establishes updated loan terms, interest rates, and disbursement or repayment options.
Homeowners typically consider refinancing their initial reverse mortgage after a change in circumstances, such as an increase in home value, desire to add a spouse, or evolving retirement and estate-planning goals.
Important: To remain eligible for any reverse mortgage—original or refinanced—borrowers must continue to live in the home as their primary residence, meet age requirements, and have sufficient equity. Lenders also review whether property taxes and homeowners insurance are current and if maintenance obligations are met.
→ Learn more about how reverse mortgages work.
Why would you refinance a reverse mortgage?
Most borrowers refinance a reverse mortgage for the same reason they refinance any loan: their situation changes. Refinancing a reverse mortgage may allow you to access more home equity, switch loan types, get a better interest rate, or increase your financial flexibility.
Put simply, what made sense a few years ago may not feel like the right fit today. Here are the most common reasons homeowners choose to refinance:
Access more home equity
If your home has increased in value since you first took out your reverse mortgage, refinancing may open the door to additional equity. Higher Federal Housing Administration (FHA) lending limits or appreciation in home value may increase the amount available through a new loan, even after paying off the existing reverse mortgage balance.
Lower interest rate or better loan terms
Interest rates affect how quickly a reverse mortgage loan balance grows over time. Refinancing into a loan with a lower interest rate or improved terms may slow balance growth, which could help preserve more home equity in the long run.
Add a spouse to the loan
Some borrowers refinance to add a spouse who was not originally listed as a borrower on the reverse mortgage. This situation is especially common when the borrower marries after the loan or if a younger spouse did not meet age requirements at the time of the original loan. Refinancing may provide additional protections and long-term stability for both spouses.
→ Learn more about non-borrowing spouses and reverse mortgages.
Switch loan types
Refinancing may allow homeowners to change loan structures, such as moving from an adjustable-rate HECM to a fixed-rate option or to a proprietary reverse mortgage with higher lending limits. This flexibility may help reverse mortgage borrowers better match the loan to their financial needs.
Reduce costs
In some cases, newer reverse mortgage options offer different servicing structures or no mortgage insurance premium. Depending on the terms, refinancing may reduce certain ongoing expenses over time.
Improve long-term financial flexibility
Refinancing may help homeowners restructure how they receive funds. You may want to establish or expand a line of credit or adjust monthly payments to better align the loan with your updated retirement or estate-planning goals. For borrowers seeking more control over cash flow, this flexibility can make it easier to plan for the future.
How to refinance a reverse mortgage
Refinancing a reverse mortgage follows a similar path to getting your original loan, but with a few extra checkpoints along the way. The goal is to confirm eligibility, review whether refinancing truly makes sense, and ensure you understand how the new loan may affect your finances and housing plans.
While the details vary depending on whether you’re refinancing into a HECM or a proprietary reverse mortgage, the overall process is similar. Here’s a general idea of what to expect:
Step 1: Review your current reverse mortgage
Consider your existing loan balance, interest rate, remaining line of credit (if applicable), and the amount of remaining home equity. Understanding where you stand now could help determine whether refinancing may provide meaningful benefits.
Step 2: Confirm eligibility for refinancing a reverse mortgage
To refinance, you must continue to live in the home as your principal residence and stay current on property taxes, homeowners insurance, and required home maintenance. Sufficient equity is also required, and age rules apply—borrowers must be at least 62 for an FHA-insured HECM, while some proprietary reverse mortgages allow borrowers as young as 55.
These materials were not provided by HUD or FHA and were not approved by FHA or any government agency.
For HECM-to-HECM refinances, the U.S. Department of Housing and Urban Development (HUD) requires the new loan to provide a net tangible benefit, which means the new loan must offer a clear improvement over the existing loan, such as increased available proceeds, improved loan terms, or features that better align with the borrower’s current needs.
Step 3: Attend HUD-approved counseling
HUD-approved counseling is required for HECM refinances and most proprietary reverse mortgage refinances. During this session, a counselor reviews the proposed loan terms, costs, ongoing responsibilities, and possible alternatives. The goal is to help ensure you fully understand how refinancing may affect your financial well-being and housing situation.
Step 4: Apply with a lender
The application process includes providing documents such as proof of income, bank statements, identification, and information related to property taxes and insurance.
Lenders also complete a financial assessment to evaluate your ability to meet ongoing obligations. At this stage, you’ll discuss disbursement options for loan proceeds, such as a lump sum, monthly payments, a line of credit, or a combination of those options.
Step 5: Appraisal and underwriting
An appraisal determines the current value of your home, which directly affects how much equity may be available in the new loan. The lender also completes underwriting to confirm the property meets FHA or lender-specific requirements and all other eligibility criteria.
These materials were not provided by HUD or FHA and were not approved by FHA or any government agency.
Step 6: Finalize the loan
Before closing, review all fees and costs associated with the refinancing process. Reverse mortgage fees typically include appraisal fees, origination fees, standard closing costs, and mortgage insurance premiums for HECM loans. Understanding these costs helps you evaluate the overall benefit of refinancing.
Step 7: Receive loan proceeds or updated payment plan
Once the loan closes, proceeds are used to pay off the existing reverse mortgage. Any remaining funds are disbursed according to your selected payout option, or your payment structure and line of credit are updated based on the new loan terms.
To learn more, please visit the CFPB’s Reverse Mortgage: A Discussion Guide.
What are your options when refinancing a reverse mortgage?
Generally, when refinancing a reverse mortgage you have three options: HECM-to-HECM refinance, switching to a proprietary reverse mortgage, or refinancing into a conventional forward mortgage. Each approach serves different financial goals and has different eligibility requirements.
This table breaks down the core differences:
| Refinance Option | Eligibility Basics | Best For | Key Pros | Key Cons |
| HECM-to- HECM Refinance | Age 62+; primary residence; sufficient equity; must provide a net tangible benefit; HUD counseling required | Borrowers who want FHA protections and improved terms | FHA-insured; no monthly mortgage payments; flexible payout options | Mortgage insurance premiums; loan limits apply |
| Proprietary Reverse Mortgage Refinance | Often age 55+; higher home value; lender-specific guidelines | Owners of higher-value homes seeking higher loan proceeds | Higher lending limits; no mortgage insurance premium | Less standardized; fewer consumer protections |
| Refinance Into a Conventional Mortgage | Qualify based on income, credit, and debt-to-income ratios | Borrowers planning to sell, move, or preserve equity | Pays off reverse mortgage; may leave more equity for heirs | Monthly mortgage payments required; credit/income underwriting |
These materials were not provided by HUD or FHA and were not approved by FHA or any government agency.
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.
HECM-to-HECM refinance
This option replaces an existing FHA-insured Home Equity Conversion Mortgage (HECM) into a new HECM. HUD requires these refinances to provide a net tangible benefit, meaning the new loan must leave you in a clearly better financial position than your current one. That improvement may come in the form of more available funds, a lower effective interest rate, or loan features that better fit your current needs.
HECM-to-HECM refinances follow standard FHA guidelines, including age, equity, and counseling requirements.
Proprietary reverse mortgage refinance
Some borrowers refinance into a private reverse mortgage, such as jumbo reverse mortgage loans. These loans have different requirements from HECMs and are not insured by the Federal Housing Authority (FHA).
Proprietary reverse mortgages may have different age requirements—some allow borrowers as young as 55—and different underwriting standards. This option may appeal to homeowners seeking access to more equity without mortgage insurance premiums.
→Learn more about HomeSafe, a proprietary reverse mortgage from Finance of America.
Refinance into a conventional mortgage
Refinancing into a conventional mortgage may make sense for borrowers planning to sell the home in the near future, move to a different property, or leave more equity to heirs.
Considerations before refinancing your reverse mortgage
Refinancing a reverse mortgage may open the door to more benefits, but it’s worth slowing down to consider the full picture. Here’s what to keep in mind:
Upfront Costs and Closing Costs
Refinancing a reverse mortgage involves upfront costs that are typically added to the loan balance. Just like your original reverse mortgage, there are upfront costs including appraisal fees, origination charges, counseling fees, and other closing costs. If you’re refinancing into a HECM, mortgage insurance premiums also apply.
Because these expenses are usually rolled into the new loan, they reduce the amount of home equity available over time.
Impact on remaining home equity
Refinancing resets your loan balance and affects the amount of equity remaining in your home. While a refinance may provide access to more funds in the short term, it also increases the total loan balance once existing debt and new costs are combined.
That’s an important consideration if you’re thinking about future needs or what you’d like to leave behind for heirs.
Interest rate considerations
Interest rates influence how quickly a reverse mortgage balance grows. A lower rate may slow the growth of your loan balance, which could help preserve equity longer. A higher rate does the opposite. Comparing your current rate with the new one helps show whether refinancing truly improves your situation.
Eligibility for needs-based programs
Changes in loan proceeds may affect eligibility for needs-based programs like Medicaid or Supplemental Security Income (SSI). A new payout or larger proceeds could affect whether you qualify. Talking with a benefits advisor or financial expert may help avoid surprises down the road.
Your long-term housing plans
Refinancing comes with both upfront costs and costs spread out over time. The longer you stay in the home, the more time you have for those costs to make sense in the context of your overall finances.
If you expect to move or sell in the near future, refinancing may not provide enough long-term value to offset the added expenses.
Pros and cons of refinancing a reverse mortgage
Refinancing a reverse mortgage isn’t a simple decision. For some homeowners, it may improve flexibility or better align the loan with current needs. For others, the added costs may outweigh the upsides. Considering both the pros and cons can help you clarify whether refinancing makes sense for you.
Potential pros of refinancing your reverse mortgage:
- Access to additional home equity: If your home value has increased or lending limits are higher than when you first borrowed, refinancing may allow access to more equity.
- Potential for improved loan terms: A lower interest rate or different loan structure may slow loan balance growth or better fit with your current financial goals.
- Opportunity to add a spouse to the loan: Refinancing may allow both spouses to be listed as borrowers, offering added security and long-term planning flexibility.
- Ability to switch loan types: Refinancing may allow a move from an adjustable-rate loan to a fixed-rate option or into a proprietary reverse mortgage with higher limits.
- More flexible payout options: A new loan may allow you to reset or expand a line of credit, adjust monthly payments, or restructure how funds are received.
Potential cons of refinancing a reverse mortgage include:
- Upfront costs and fees: Refinancing comes with appraisal, origination, counseling, and closing costs, along with mortgage insurance premiums for HECM loans. Those fees add to the balance of the loan.
- Reduced remaining home equity: New loan costs and a reset loan balance may reduce how much equity remains over time, which may impact you or your heirs’ future options.
- Interest rate risk: If rates are higher than when your original loan was issued, refinancing may cause the loan balance to grow faster.
- Impact on needs-based benefits eligibility: Changes in proceeds or payout structure may affect eligibility for needs-based programs like Medicaid or SSI.
- Not ideal for short-term plans: If you expect to move or sell the home soon, refinancing may not provide enough value to justify the costs.
Looking at both the advantages and the tradeoffs together may make it easier to decide whether refinancing fits your current situation.
Find out how much you may be eligible for
In the end, refinancing a reverse mortgage is a personal decision. The right choice depends on your home value, loan balance, future plans, and overall financial picture. While refinancing may create new options for some homeowners, it’s important to understand how the changes may impact your future financial situation.
If you’re curious about what refinancing might look like in your case, exploring your options is the next step. Use our reverse mortgage calculator to see how much you may be eligible for and whether refinancing makes sense for you.
Frequently asked questions about reverse mortgage refinancing
Can an heir refinance a reverse mortgage?
Yes. When a borrower passes away, the reverse mortgage becomes due. Heirs may refinance the loan into their own name if they are eligible and plan to keep the home. Many heirs choose a traditional mortgage rather than a reverse mortgage.
Can you refinance a reverse mortgage into a conventional mortgage?
Yes. A reverse mortgage may be refinanced into a forward mortgage that requires monthly mortgage payments. This option is commonly considered when preserving equity or preparing to sell the home.
How many times can you refinance a reverse mortgage?
There is no formal limit. Each refinance must meet eligibility requirements, and FHA-insured refinances must demonstrate a net tangible benefit.
These materials were not provided by HUD or FHA and were not approved by FHA or any government agency.
What is the 95% rule of a reverse mortgage?
The 95% rule is part of the non-recourse feature of FHA-insured reverse mortgages. If the borrower passes away and the loan balance is higher than the home’s value, heirs can choose to repay the loan by paying 95% of the home’s current appraised value—or the full loan balance, whichever is less. This means neither the borrower nor their estate will owe more than the home is worth. The lender cannot pursue other assets to cover the difference.
A nonrecourse reverse mortgage transaction limits the homeowner’s liability to the proceeds of the sale of the home (or any lesser amount specified in the credit obligation).
Non-recourse means that you, or your estate, can’t owe more than the value of your home when the loan becomes due and the home is sold.
Non-recourse means that if you default on the loan, or if the loan cannot otherwise be repaid, the lender cannot look to your other assets (or your estate’s assets) to meet the outstanding balance on your loan.
What is the 2% rule for refinancing?
The 2% rule is a general refinancing guideline (not specific to reverse mortgages) that suggests refinancing may make sense when the new interest rate is at least two percentage points lower than the existing rate. For reverse mortgages, HUD instead focuses on whether a refinance provides a net tangible benefit, rather than a specific rate reduction.
What is a net tangible benefit in a reverse mortgage?
A net tangible benefit is a HUD requirement for refinancing an FHA-insured reverse mortgage. The new loan must provide a clear, measurable improvement over the existing loan, such as increased proceeds, improved terms, or enhanced loan features.
These materials were not provided by HUD or FHA and were not approved by FHA or any government agency.
