Quick Answer: A reverse mortgage includes upfront fees, ongoing costs, and regular homeownership expenses, like property taxes and maintenance. Recurring costs such as interest, servicing fees, and mortgage insurance can add up over time and affect how much equity you have available in the future.
Key Takeaways
- Reverse mortgages include upfront fees and ongoing costs that can reduce the equity available to you or your heirs over time.
- Interest is added to the loan balance, so costs usually increase the longer the loan is open.
- Looking at how reverse mortgages compare to other home equity options can help you choose the path that feels right for your situation.
Reverse mortgage costs are often one of the most misunderstood parts of a loan type that is already confusing for many homeowners. Between upfront fees and costs that build over time, it’s not always clear what you’ll actually pay at the end of the day.
This guide breaks down the most common reverse mortgage fee types, so you can understand how they work and decide whether this option fits into your plans.
How do reverse mortgages work?
A reverse mortgage allows you to borrow against your home’s value without making monthly mortgage payments. You may receive funds as a lump sum, a line of credit, monthly payouts, or a combination of these options. Over time, interest and fees are added to the loan balance, which is repaid after the borrower moves out, passes away, or fails to meet the terms of the loan.
Homeowners must continue to live in the home as their primary residence, pay property taxes and homeowners insurance, and maintain the property. The most common reverse mortgage is a Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA) and available to borrowers age 62 and older.
Proprietary reverse mortgages, including jumbo options for higher-value homes, are offered by private lenders and are not government-insured. To learn more, please visit the CFPB’s Reverse Mortgage: A Discussion Guide.
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.
→Learn more in our guide, How does a reverse mortgage work?
What costs and fees come with a reverse mortgage?
In general, reverse mortgage costs fall into two main categories: upfront fees you’ll pay at closing and ongoing costs that build over time. Understanding how these fees work may help you decide whether a reverse mortgage fits your existing needs and long-term plans.
In this guide, we’ll walk through the most common reverse mortgage fees and show how they can affect your loan balance over time.
The table below shows an example of typical upfront fees for a reverse mortgage on a home valued at $500,000. Actual costs may vary depending on the lender and loan type.
| Upfront fees for HECM | Amount |
| Loan origination fee (FHA maximum) | $6,000 |
| Initial mortgage insurance premium (2%) | $10,000 |
| Appraisal | $500 |
| Title insurance | $1,800 |
| Other closing costs | $3,200 |
| Estimated total upfront costs | ~$21,500 |
Sources: Consumer Financial Protection Bureau guidance on reverse mortgage costs; HUD/FHA mortgage insurance and origination fee rules; independent reverse mortgage fee breakdowns.
To help put these costs into perspective, the table below illustrates how a reverse mortgage loan balance could grow over time if a homeowner borrows $250,000, rolls eligible upfront costs into the loan, and accrues interest at an assumed annual rate of 6.5%.
The 6.5% rate is used solely for illustrative purposes and reflects a reasonable, mid-range example based on commonly observed reverse mortgage interest rates. Actual rates vary by lender, loan type, and market conditions, and may be higher or lower at the time of application.
| Timeframe | Estimated loan balance |
| Starting loan balance | $271,500 |
| After 5 years | ~$372,000 |
| After 10 years | ~$510,000 |
| After 15 years | ~$700,000 |
As interest and fees are added each month, the loan balance increases—something that’s important to understand when planning for the future.
Most reverse mortgage fees fall into four categories: small early expenses, larger upfront closing costs, ongoing loan-related costs, and continuing homeownership responsibilities. Here’s how those costs typically break down:
| Fee type | Examples | Amount |
| Early costs | HUD counseling, appraisal | ≈ 0.5% to 1% of the home’s value |
| Upfront/closing costs | Origination fee, initial mortgage insurance premium for HECM, title insurance | ≈ 2% to 6% of the home’s value |
| Ongoing loan costs | Servicing fees, interest charges, annual mortgage insurance premium for HECM | ≈ 1% to 2% per year of the outstanding loan balance |
| Ongoing homeownership responsibilities | Property taxes, maintenance | ≈ 1% to 3% per year of the home’s value |
You can choose to pay upfront fees out of pocket at closing or roll them into your reverse mortgage. Rolling costs into the loan can make getting started easier, since there’s no upfront payment—but it also means you’ll have less available equity later, and those costs will grow over time as interest accrues.
Because fees can vary by lender, it may be helpful to compare offers from multiple lenders before moving forward. Taking the time to understand your options may help you manage costs and feel more confident in your decision.
Let’s take a closer look at the fees that come with a reverse mortgage, starting with the costs you’ll encounter early in the application process and moving through to the fees due at closing.
HUD-required counseling
If you’re applying for a Home Equity Conversion Mortgage (HECM), the U.S. Department of Housing and Urban Development (HUD) requires you to complete a counseling session before a lender can move forward with your application. This step is designed to make sure you understand how reverse mortgages work, including the costs, repayment triggers, and possible alternatives.
The session is conducted by a HUD-approved counselor and typically costs between $125 and $250. During the session, you can ask questions to help ensure a reverse mortgage aligns with your goals and long-term plans. While it’s a required step, many homeowners find it helpful for gaining clarity before moving forward.
You’ll also need an appraisal to confirm your home’s market value and overall condition. Appraisal fees usually range from $300 to $600, depending on your home’s size, location, and complexity.
The appraisal helps determine how much you may be able to borrow. If it identifies any required repairs, those issues typically need to be addressed before the loan can move ahead.
Some costs, like counseling and the appraisal, are required to be paid upfront.
Now, let’s look at the fees you’ll have to pay at closing.
Loan origination fees
The loan origination fee covers the lender’s costs for processing and underwriting your reverse mortgage. For HECM loans, this fee generally ranges from $2,500 to $6,000, depending on the loan amount.
The Federal Housing Administration (FHA) sets the formula lenders use to calculate this fee:
- 2% of the first $200,000 of the home’s value
- 1% of the amount over $200,000
- Maximum: $6,000
- Minimum: $2,500
This FHA formula applies only to HECM loans. Origination fees for proprietary reverse mortgages are set by individual lenders.
These materials were not provided by HUD or FHA and were not approved by FHA or any government agency.
Initial mortgage insurance premiums
HECM borrowers also pay an initial mortgage insurance premium, typically about 2% of the loan amount, which is paid to the FHA at closing.
This insurance protects both you and the lender. It ensures you receive the full loan proceeds promised and other protections, like neither you nor your heirs will ever owe more than the value of your home when the loan becomes due and the home is sold. If the loan balance exceeds the home’s value when the loan becomes due and payable, FHA insurance covers the difference.
Title insurance
Title insurance is generally required for all reverse mortgages. It confirms you have clear ownership of the home and protects the lender against any future title-related issues.
This is a one-time closing cost that varies by location and home value, typically ranging from about 0.1% to 1.0% of the home’s value or loan amount. For many homeowners, title insurance is one of the higher upfront costs, along with origination fees and mortgage insurance.
Closing costs
In addition to the fees above, reverse mortgages include standard closing costs similar to those on a traditional mortgage. These may include title search and recording fees, surveys, credit checks, document preparation, and other administrative expenses.
Closing costs generally range from $1,500 to $4,000, depending on your location and lender. You can pay these costs upfront or roll them into the loan, although rolling them in will reduce the amount of equity available to you later.
Potential state-specific fees
Depending on where you live, you may also see state or local fees added at closing. These can range from $500 to more than $3,000 and may include recording fees, mortgage taxes, transfer taxes, or other legal or title-related charges.
Examples include:
Your lender should be able to provide a state-specific breakdown so you know exactly what applies in your case.
In addition to upfront fees, reverse mortgages come with ongoing costs that build over time. Understanding these expenses can help you plan ahead and avoid surprises down the road.
Servicing fees
Throughout the life of the loan, lenders charge a monthly servicing fee to manage your reverse mortgage. This covers tasks like sending statements, administering your payments or line of credit, and making sure property taxes and insurance are up to date.
Servicing fees typically range from $25 to $35 per month and are added to your loan balance over time.
Annual mortgage insurance premiums
HECM borrowers also pay an annual mortgage insurance premium to the FHA, usually 0.5% of the outstanding loan balance. Like servicing fees, this cost accrues monthly and is added to the loan balance.
This insurance provides important protection. It includes non-recourse coverage, which means you (or your heirs) will never owe more than the value of your home when the loan becomes due and the home is sold—even if the loan balance is higher.
A non-recourse 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.
Interest charges
Along with property taxes and insurance, interest is one of the largest ongoing costs of a reverse mortgage. Interest rates typically range from about 3.5% to 8.0%, depending on the lender, loan type, and market conditions.
As interest accrues each month, it’s added to the loan balance. Over time, future interest is charged on that growing amount—a process known as compounding.
Here’s an example of how that can look with a $200,000 loan at a 6.5% interest rate:
| Years | Approximate loan balance |
| 5 | $273,700 |
| 10 | $374,900 |
| 15 | $513,600 |
| 20 | $703,700 |
Reverse mortgages can have fixed or adjustable interest rates. Fixed rates offer predictability but are usually available only with lump-sum disbursements. Adjustable rates allow more flexibility in how you receive funds, but the rate can change over time.
Annual property taxes
If you have a reverse mortgage, you must continue paying your property taxes when they’re due. Property tax amounts vary by location and can change from year to year.
If rising property taxes are a concern, you may want to explore whether you qualify for relief programs such as homestead exemptions or state-based tax breaks. For example, New York allows eligible homeowners age 65 and older to claim a higher property tax exemption.
The AARP’s Property Tax-Aide website can help you identify programs that may be available in your area.
Not tax advice. Consult a tax professional.
Home maintenance
You’re also responsible for keeping the home in good condition. But while many reverse mortgage costs can be rolled into the loan, maintenance expenses cannot.
A common rule of thumb is to budget about 1% to 3% of the home’s value per year for upkeep. This includes routine costs like lawn care and gutter cleaning, as well as larger expenses such as roof repairs or appliance replacement.
Staying current on maintenance is important, since failing to meet this obligation could cause the loan to become due.
What influences reverse mortgage costs?
Several factors affect how much a reverse mortgage costs over time. These include your home’s value, location, interest rates, your age, and the lender you choose. Here’s how those factors come into play.
Home value
Higher-value homes generally come with higher upfront costs, such as appraisal fees and mortgage insurance premiums. For HECM loans, origination fees are capped at $6,000.
Home value also affects how much you can borrow and whether you are eligible for proprietary or jumbo reverse mortgages, which may allow eligible homeowners to take out larger amounts. Because interest accrues on a higher balance, larger loans typically result in higher long-term costs.
Geographic location
Where you live matters, too. Local cost-of-living differences can affect appraisal and closing costs, and state or local fees—such as recording fees, title rules, or attorney requirements—can vary widely.
Lender competition also differs by market, which is why it’s often helpful to compare offers from more than one lender.
Interest rate environment
Your interest rate plays a major role in how quickly the loan balance grows. Even small differences in rates can have a big impact over time, so shopping around can make a meaningful difference in long-term costs.
Age of youngest borrower
Age doesn’t directly change fees, but it can affect how much you’re able to borrow. Older homeowners may be eligible to access a larger portion of their home equity, which can lead to higher loan amounts and related costs.
→Learn more about spousal protections in A non-borrowing spouse guide to reverse mortgage.
Credit and financial assessment
Credit scores don’t affect eligibility for HECM loans, but they may matter for proprietary reverse mortgages.
Lenders also conduct a financial assessment to make sure you can continue paying property taxes and homeowners insurance. If there’s concern about future affordability, the lender may require a Life Expectancy Set-Aside (LESA), which reserves part of your loan proceeds to cover those costs.
Lender choice
The lender you choose can significantly affect both upfront fees and interest rates. Getting three to five quotes can help you compare options and understand trade-offs, such as lower upfront costs versus higher long-term interest.
How do your home equity options compare?
If you’re thinking about using your home equity, you’re not limited to just one option. Reverse mortgages, home equity loans, and HELOCs all work differently—and the short- and long-term costs can vary quite a bit depending on the loan structure.
Understanding how these options compare can help you choose the one that best fits your financial needs, lifestyle, and retirement plans. Here’s a closer look at how the most common home equity options stack up.
HECM reverse mortgage
A Home Equity Conversion Mortgage (HECM) allows eligible homeowners to access their home equity without making monthly mortgage payments. Instead, interest and mortgage insurance premiums—typically 0.5% annually—are added to the loan balance over time.
Because no monthly payments are required, interest and fees accrue on the outstanding balance and compound. As the Consumer Financial Protection Bureau explains, these charges are added each month, causing the total amount owed to grow over time. AARP also notes that this ongoing accrual reduces home equity and increases the loan balance the longer the loan remains outstanding. As a result, on a $200,000 reverse mortgage loan, total interest and fees over ten years could exceed $180,000, depending on the interest rate, fees, and loan structure.
That said, many homeowners value the flexibility a HECM offers—particularly the ability to access funds without taking on a new monthly mortgage payment.
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.
HECMs also include non-recourse protection, which means neither you nor your heirs will ever owe more than the value of your home when the loan becomes due and the home is sold.
A non-recourse 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.
Home equity loan
A traditional home equity loan provides a lump sum with a fixed or adjustable interest rate. Upfront closing costs typically range from $2,000 to $5,000, and you’ll begin repaying principal and interest right away.
While total interest costs are usually lower than with a reverse mortgage, home equity loans require steady income and the ability to make monthly payments—both to become eligible and to stay current on the loan.
Finance of America does not currently offer home equity loans.
Home equity line of credit (HELOC)
A HELOC offers a revolving line of credit you can draw from as needed, if you are eligible based on income and credit. Many lenders offer low or even no upfront costs, often ranging from $0 to $3,000.
The total cost of a HELOC depends on how much you borrow and how long you carry a balance. Interest rates are typically variable and, as of early 2026, often fall in the 7% to 8% range. Minimum monthly payments are required.
Proprietary reverse mortgages
Proprietary reverse mortgages are private-lender options designed for higher-value homes, often those valued at $750,000 or more. These loans may allow eligible homeowners to access more equity than a HECM.
Unlike HECMs, they’re not insured by the FHA, which means there’s no monthly mortgage insurance premium. However, interest rates may be higher to offset the lack of insurance.
Finance of America offers a range of proprietary reverse mortgages including HomeSafe Second. Eligibility requirements and costs vary by lender and loan structure.
Comparing your home equity options at a glance:
| Feature | HECM reverse mortgage | Home equity loan / HELOC | Proprietary reverse mortgage |
| Upfront costs | ~$2,000–$5,000 | ~$0–$5,000 (often lower) | Varies; similar to HECM, no FHA insurance |
| Ongoing costs | Interest + FHA mortgage insurance | Interest only | Interest only |
| Monthly payment required? | No* | Yes | No* |
| Interest rate | Fixed or adjustable | Fixed or variable | Usually adjustable |
| Qualifications | Age 62+, home equity, financial review, primary residence, maintain the home, must pay taxes and insurance costs | Income, credit, ability to repay | Age-based + lender rules |
| Protection if loan balance grows | Yes (you never owe more than the home’s value) | No | Yes (not government-insured) |
| How you access money | Lump sum, monthly payments, line of credit, or combination | Lump sum or line of credit | Usually lump sum or line of credit |
| Estimated long-term cost | Higher over time due to interest & insurance | Lower if payments are made | Varies; often higher rates but no insurance |
| Best for | Seniors who want cash without monthly payments* | Homeowners who can afford monthly payments | Seniors with higher-value homes who want more borrowing power |
*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.
Take the next steps
Reverse mortgages have a unique cost structure that includes upfront fees, ongoing interest and insurance, and continuing responsibilities like paying property taxes and maintaining the home. While eliminating monthly mortgage payments could offer flexibility, it’s important to understand how these costs may affect your home equity over time.
Before moving forward, think about how long you plan to stay in your home, how much equity you want to access, and how a reverse mortgage compares to other home equity options. Taking the time to review costs, compare lenders, and consider different scenarios can help you feel more confident in your decision.
You can also use our reverse mortgage loan calculator to estimate costs and see how a reverse mortgage might work for your situation.
Frequently asked questions about reverse mortgage costs
What are the upfront costs of a reverse mortgage?
For a Home Equity Conversion Mortgage (HECM), upfront costs typically range from about $10,000 to $15,000. These costs may include the loan origination fee, initial mortgage insurance premium, appraisal, title insurance, HUD-mandated counseling fee, and closing costs. Proprietary reverse mortgage costs vary by lender and loan type.
Do I pay closing costs on a reverse mortgage?
Yes. Borrowers typically pay closing costs, which can include an appraisal, credit check, inspections, mortgage taxes, recording fees, surveys, title search, and other fees. You can pay these costs upfront or roll them into the loan.
Are reverse mortgage costs tax-deductible?
Most costs associated with a reverse mortgage loan are not tax-deductible. That includes origination fees, closing costs, and the initial mortgage insurance premium payment. However, according to the IRS, interest may be deductible when you actually pay it, which is typically when the borrower pays off the loan.
Not tax advice. Consult a tax professional.
How do reverse mortgage costs compare to regular mortgages?
Reverse mortgages generally have higher upfront and long-term costs than traditional mortgages.That’s because interest and mortgage insurance are added to the loan balance over time, rather than being paid down with monthly 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.
Can I negotiate reverse mortgage fees?
Some fees are negotiable, others are not. Fees that may be negotiable include the origination fee, interest rate, and third-party fees like the appraisal, title, or settlement fees. Fees that are not typically negotiable include mortgage insurance premiums, which are set by the FHA, as well as the counseling fee.
What’s the most expensive part of a reverse mortgage?
The most expensive cost associated with a reverse mortgage loan is usually the interest. It is added to the balance every month and future interest is charged on the growing balance. Over time, this typically adds up to more than any other single upfront fee or ongoing expense.
