What is a reverse mortgage?

A reverse mortgage is a loan for homeowners aged 55 or older¹. It provides borrowers access to some of the value of their home (equity) to get money without needing to make monthly mortgage payments². Borrowers can receive this money as a lump sum, monthly payments, a line of credit, or a combination of these³.

Borrowers keep owning and living in their home⁴. The loan balance, including interest, must be paid back when borrowers move out permanently, sell the home, pass away, or fail to meet loan obligations, like paying taxes and insurance.

Types of reverse mortgages

There are two main types of reverse mortgages:

• Government-Insured (HECM). These are called Home Equity Conversion Mortgages (HECM). They have strict rules set by the Federal Housing Administration (FHA). Borrowers must be at least 62 years old for HECMs. They also must buy FHA mortgage insurance. The FHA controls loan limits and other requirements.⁵
• Proprietary Reverse Mortgages (like HomeSafe). These mortgages are made by private lenders. They have fewer restrictions on age and loan amounts. Rules can vary by state and lender. Some proprietary reverse mortgages let borrowers as young as 55 apply.

Currently, HomeSafe Second gives borrowers money only as one lump sum.

Borrowers must live in their home as their primary residence, pay property taxes, homeowners insurance, and other property fees, and keep their home in good condition. If they don’t follow these rules, the loan will be called due and must be paid back.

^1. Minimum age requirements vary by state and loan type. 62 is the minimum age for a HECM. Certain proprietary products have minimum ages as low as 55.

^2. 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.

^3. Currently, HomeSafe Second proceeds are only available as a lump sum.

^4. The right to remain in the home is contingent on paying property taxes and homeowner’s insurance, maintaining the home, and complying with the loan terms.

^5. These materials were not provided by HUD or FHA and were not approved by FHA or any government agency.