Reverse mortgages in California: Rights and eligibility requirements

If you’re a California resident considering a reverse mortgage loan, it’s important to be aware of the protections and eligibility requirements before proceeding. California law includes three important rights for reverse mortgage borrowers that are not available in all states.

For reverse mortgage loans: 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.

If you have questions about reverse mortgages in general, learn more in our comprehensive guide What is a reverse mortgage and how does it work.

California reverse mortgage borrower rights

Before beginning their loan application, all reverse mortgage borrowers are required by federal law to meet with an independent, third-party counselor who has been approved by the Federal Housing Administration (FHA), which is part of the Department of Housing and Urban Development (HUD). In the counseling session, borrowers will receive written documentation that discloses each fee and have the chance to ask questions.

California requires the following additional protections related to the counseling and application process:

• Mandatory disclosures: Reverse mortgage borrowers must receive a Reverse Mortgage Worksheet Guide and an Important Notice to Reverse Mortgage Loan Applicant disclosure from the lender. These documents must be provided before counseling and before the initial loan application, and the borrower must certify they received these before their mandatory counseling session. If counseling is completed before lender contact, the counselor must provide the disclosures.
• Seven-day cooling off period: Counseling must be completed at least seven days before the lender assesses any fees to the borrower or accepts a “final and complete” application, including application material sufficient to make a credit decision. This gives the borrower time to get educated about the product before being bound to any loan terms or fees.
• Contract negotiation rights: If the loan negotiation is primarily conducted in Chinese, Korean, Spanish, Tagalog, or Vietnamese, the borrower must receive a copy of the final contract in that language before signing. Please note that lenders are not legally required to offer loan negotiations in any of the above-mentioned languages.

Discover your home equity

Get a tailored estimate in minutes with no obligation

Get an estimate

General reverse mortgage eligibility requirements for all borrowers

Borrowers must meet the following requirements, at minimum, to be eligible for a reverse mortgage:

• Minimum age: Borrowers must be at least 62 years old for FHA-insured reverse mortgages. Proprietary reverse mortgages may have lower age minimums.
• Primary residence: The home must be the borrower’s principal residence where they live for at least six months and one day each year.
• Financial obligations: While monthly mortgage payments are not required, borrowers must be able to maintain the home and pay property taxes, homeowner’s insurance, and HOA fees (if applicable).
• Eligible property types: Eligible properties include single-family homes, 2–4 unit homes, FHA-approved condominiums, and HUD-compliant manufactured homes built after June 15, 1976.
• Substantial home equity: Borrowers typically need at least 50% equity in their home to potentially be eligible for a reverse mortgage.

–> Learn more about reverse mortgage eligibility requirements.

Though California offers a few unique rights for reverse mortgage borrowers, the core eligibility criteria remain consistent nationwide.

Although no monthly mortgage payments are required, to retain ownership and avoid default, you will still be required to pay your property taxes, homeowner’s insurance, and upkeep in a timely manner and comply with loan terms for as long as you own your home.

As with any major financial decision, speak with a qualified financial advisor to review requirements and consumer protections before proceeding.

[Disclaimer]

This article is intended for general informational and educational purposes only and should not be construed as financial or tax advice. For more information about whether a reverse mortgage may be right for you, you should consult an independent financial advisor. For tax advice, please consult a tax professional.