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15 reverse mortgage facts
In this article:
- 1. You still own your home with a reverse mortgage loan
- 2. Home Equity Conversion Mortgages (HECMs) are the most common type
- 3. There are eligibility requirements—and they may vary by loan type
- 4. Reverse mortgages may be available for homeowners under age 62
- 5. There are no required monthly mortgage payments
- 6. The loan balance grows over time as interest and fees are added
- 7. Reverse mortgage borrowers may have access to a line of credit–and it can grow
- 8. Reverse mortgages may offer multiple payout options
- 9. Most reverse mortgages are non-recourse loans
- 10. You have a three-day right to cancel
- 11. Borrowers must complete counseling during the application process
- 12. Surviving spouses may be able to remain in their own home
- 13. Reverse mortgages include upfront and ongoing costs
- 14. Reverse mortgages generally don’t affect Social Security or Medicare benefits
- 15. Reverse mortgage proceeds are generally not taxable
- What these reverse mortgage facts mean for you
- Frequently asked questions about reverse mortgages
For many homeowners, the idea of a reverse mortgage brings a mix of curiosity and hesitation. You may have heard that it lets you access your home equity—but you may have also heard concerns that make you pause.
That tension is common. Reverse mortgages are often misunderstood, partly because they work differently than traditional home loans and may seem complex at first glance.
At their core, reverse mortgages may allow older homeowners to access a portion of their home equity, with repayment typically deferred until the home is sold, the borrower moves out, or passes away.
Reverse mortgage facts like these are designed to cut through the confusion and highlight what actually matters—so you can better understand how they work and whether they may fit your financial goals.
Here are 15 key facts to know:
1. You still own your home with a reverse mortgage loan
You retain the title to your home, just like with a traditional mortgage. This means you continue to own the property and may choose to sell it at any time.
That said, there are a few ongoing responsibilities—like paying property taxes, maintaining homeowners insurance, and keeping the home in good condition. If these obligations are not met, the loan may become due.
2. Home Equity Conversion Mortgages (HECMs) are the most common type
Most reverse mortgages are Home Equity Conversion Mortgages (HECMs), which are insured by the Federal Housing Administration (FHA). As part of the FHA’s reverse mortgage program, HECMs follow standardized guidelines that govern eligibility, loan limits, and how funds may be received.
HECMs offer several payout options, including a lump sum, line of credit, or monthly payments. They also include borrower protections, such as non-recourse features, meaning you or your heirs will not owe more than the home’s value when the loan becomes due.1
To learn more, please visit the CFPB’s “Reverse Mortgage: A Discussion Guide.”
3. There are eligibility requirements—and they may vary by loan type
To be eligible for a reverse mortgage, there are a few key requirements to keep in mind. For HECMs, this typically includes being age 62 or older, living in the home as a primary residence, and either owning the home outright or having a low remaining mortgage balance.
Eligible properties generally include single-family homes, certain multi-unit properties, and FHA-approved condominiums and manufactured homes.
Additional requirements vary depending on the loan type, lender, and state-specific guidelines.
4. Reverse mortgages may be available for homeowners under age 62
While HECMs are generally available to borrowers age 62 and older, some proprietary, or jumbo, reverse mortgages offered by private lenders may be available to younger homeowners—sometimes starting at age 55, depending on the program and location.
These loans may have different eligibility requirements, terms, and availability than HECMs. As with any reverse mortgage, borrowers must continue to meet loan obligations, including paying property taxes, maintaining homeowners insurance, and keeping the home in good condition.
→ Learn more about HomeSafe, a proprietary reverse mortgage option available to some homeowners age 55 and older, depending on state eligibility requirements.
For certain HomeSafe products only, excluding Massachusetts, New York, and Washington, where the minimum age is 60, and North Carolina and Texas where the minimum age is 62.
5. There are no required monthly mortgage payments
One key difference with a reverse mortgage is that there are no required monthly mortgage payments toward the loan balance. Instead, interest and fees are added over time.
You’ll still need to stay current on property taxes, homeowners insurance, and home maintenance to keep the loan in good standing while the home remains your primary residence.
The loan is typically repaid when the borrower sells the home, passes away, moves out of the home for an extended period, or no longer meets the loan requirements. If the borrower is away from the home for medical reasons, repayment may be triggered after 12 or more consecutive months.
The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and 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.
6. The loan balance grows over time as interest and fees are added
With a reverse mortgage, interest and fees are added to the loan balance over time rather than paid out of pocket. The balance may increase based on the interest rate and applicable fees.
Because there are no required monthly mortgage payments, the balance will grow and, in some cases, may exceed the home’s value when the loan becomes due.
However, most reverse mortgages are non-recourse loans, meaning you or your heirs will not owe more than the home’s value when the loan is repaid.¹
→ Learn more: Reverse mortgage costs and fees explained
7. Reverse mortgage borrowers may have access to a line of credit–and it can grow
Reverse mortgages may offer several ways to receive funds, including a lump sum, monthly payments, a line of credit, or a combination of these options.
A reverse mortgage line of credit gives you the flexibility to draw funds when you need them, rather than taking everything up front. One unique feature is that any unused portion of the line of credit may grow over time, depending on the loan terms, which may increase the amount available in the future.
Because of this flexibility, a line of credit may be used to supplement income, cover unexpected expenses, or provide access to funds over time.
8. Reverse mortgages may offer multiple payout options
Borrowers may choose how they receive funds from a reverse mortgage, whether that’s a lump sum, monthly payments, a line of credit, or a mix of options.
Each option works differently, and available payout options may vary depending on the reverse mortgage product in question. A lump sum provides immediate access to funds, while monthly payments may offer a steady source of income. A line of credit allows you to draw funds as needed over time, which may provide flexibility depending on your financial goals.
→Read more: Understanding reverse mortgage payout options
9. Most reverse mortgages are non-recourse loans
Most reverse mortgages, including HECMs, are non-recourse loans, meaning that when the loan becomes due, repayment is typically limited to the home’s value.1
If the loan balance exceeds the home’s value at the time of repayment, neither you nor your heirs are responsible for paying the difference. In most cases, the loan is repaid through the sale of the home, and any remaining equity belongs to you or your estate.
Non-recourse also means the lender cannot seek repayment from your other assets or from your estate beyond the home’s value.
10. You have a three-day right to cancel
After closing, borrowers typically have three business days to cancel a reverse mortgage without penalty, also known as the right of rescission.
During this period, you may reconsider the loan and choose to cancel for any reason. Loan funds are generally not disbursed until the rescission period has ended.
11. Borrowers must complete counseling during the application process
For HECMs, borrowers are required to complete counseling with a U.S. Department of Housing and Urban Development (HUD)-approved agency before the loan may be finalized.
This session is designed to help you understand how reverse mortgages work, including the costs, loan terms, and ongoing obligations. It also provides an opportunity to ask questions and explore whether a reverse mortgage fits your financial situation.
12. Surviving spouses may be able to remain in their own home
In some cases, a surviving spouse who is not listed as a borrower—often referred to as a non-borrowing spouse—may still be able to remain in the home after the borrower passes away, provided certain eligibility requirements are met.
Eligible non-borrowing spouses may continue to live in the home as long as they meet loan requirements, such as maintaining the property, paying property taxes, and keeping homeowners insurance in place.
If a surviving spouse does not meet eligibility requirements, the loan typically becomes due and payable. For HECMs, servicers are required to provide an initial period of at least 30 days for the borrower’s estate or surviving occupants to make arrangements to repay the loan, sell the home, or pursue other options. Additional time may be requested, subject to servicer approval and program guidelines.
→Learn more: A non-borrowing spouse’s guide to reverse mortgage
13. Reverse mortgages include upfront and ongoing costs
Reverse mortgages may include both upfront and ongoing costs. Upfront costs may include an origination fee (which is capped for HECMs), mortgage insurance premiums, and typical closing costs such as appraisal and title services. In some cases, upfront costs may be higher than those associated with traditional mortgage loans.
Ongoing costs may include interest, servicing fees, and, for HECMs, annual mortgage insurance premiums. Borrowers are also responsible for paying property taxes, maintaining homeowners insurance, and keeping the home in good condition throughout the life of the loan.
14. Reverse mortgages generally don’t affect Social Security or Medicare benefits
Reverse mortgage proceeds are typically not considered income, so they generally do not affect Social Security or Medicare benefits, including Medicare Part A or Part D premiums.
However, reverse mortgage funds may affect eligibility for needs-based programs such as Medicaid or Supplemental Security Income (SSI), particularly if funds are not spent within a certain period.
Because rules vary, it may be helpful to consult a financial advisor or benefits specialist to understand how a reverse mortgage may affect your specific situation.
15. Reverse mortgage proceeds are generally not taxable
Reverse mortgage proceeds are typically not considered taxable income because they are loan advances rather than earnings.
However, tax situations vary, so it may be helpful to consult a tax professional to understand how a reverse mortgage may affect your specific situation.
To bring these reverse mortgage facts together, the table below provides a quick summary of the key points.
| Topic | Key takeaway |
| Ownership | You retain ownership of your home |
| Payments | No required monthly mortgage payments* |
| Repayment | The loan is repaid when you move, sell, pass away, or otherwise fail to meet loan obligations |
| Loan balance | The balance grows over time as interest and fees are added |
| Loan type | HECMs are the most common type of reverse mortgage |
| Eligibility | Age, equity, and residency requirements apply |
| Payout options | Lump sum, line of credit, monthly payments, or a combination |
| Protections | Repayment is limited to the home’s value (non-recourse)¹ |
| Counseling | Counseling is required during the application process for HECMs |
| Costs | Includes upfront and ongoing expenses |
| Benefits impact | Typically does not affect Social Security or Medicare |
| Taxes | Proceeds are generally not taxable |
*The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and 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 these reverse mortgage facts mean for you
Understanding these key reverse mortgage facts can help you decide whether a reverse mortgage fits into your financial plans. From how funds are received to how the loan is repaid, each factor plays a role in what it could look like for you.
Because every homeowner’s situation is different, estimating your potential proceeds could be a helpful next step. Finance of America’s reverse mortgage calculator helps you explore how factors like your age, home value, and loan type may influence the amount you could access.
Frequently asked questions about reverse mortgages
How does a reverse mortgage work?
A reverse mortgage lets eligible homeowners convert a portion of their home equity into cash. There are no required monthly mortgage payments, but the loan balance increases over time. The loan is typically repaid when the borrower sells the home, moves out permanently, passes away, or no longer meets loan requirements.
The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and 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.
How much money can you get from a reverse mortgage?
The amount you may be able to receive depends on factors such as your age, home value, interest rates, and available equity. It could also vary based on how you choose to access funds and any required obligations, such as an existing mortgage balance.
What is the 60% rule in a reverse mortgage?
For HECMs, the 60% rule limits how much of your available proceeds you may access during the first year, unless additional funds are needed to cover required obligations.
Can you lose your home with a reverse mortgage?
You retain ownership of your home, but you must continue to meet loan obligations, such as paying property taxes, maintaining homeowners insurance, and living in the home as your primary residence. If these are not met, the loan may become due.
What are the pros and cons of a reverse mortgage?
A reverse mortgage may provide access to home equity without required monthly mortgage payments and offer flexible payout options. However, it also includes costs, reduces home equity over time, and requires ongoing responsibilities to keep the loan in good standing.
The borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, and 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.
Are reverse mortgage proceeds taxable?
Reverse mortgage proceeds are generally not considered taxable income. However, it may be helpful to consult a tax professional for your specific situation.
Do reverse mortgages affect Social Security or Medicare benefits?
Reverse mortgage proceeds are typically not considered income, so they generally do not affect Social Security or Medicare. However, they may affect eligibility for needs-based programs like Medicaid or SSI.
1Non-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.
About the author
is a Senior Web Content Writer at Finance of America and a journalist with more than 20 years of experience specializing in business, and technology. Her work has been published in The Wall Street Journal, The Financial Times, and numerous other leading outlets.
Disclaimer
This article is intended for general informational and educational purposes only and should not be construed as financial or tax advice. For tax advice, please consult a tax professional. For more information about whether a reverse mortgage fits into your retirement strategy, you should consult your financial advisor.
