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Reverse mortgages in California: A comprehensive guide

Learn how reverse mortgages in California work, including state-specific laws, eligibility requirements, and fees, so you can make an informed decision.

California homeowners have quietly built an enormous amount of wealth–and it may be going untapped. Today, only about half of Californians hold some home equity compared to 63% of households elsewhere—but the value is far higher in California, around $484,000. With more than 9 million Californians over age 60 and homeownership rates near 80% among those over 64, that translates to a massive amount of equity sitting in homes across the Golden State.

Unfortunately, that wealth is tied up in property, which isn’t as easy to access as stocks, annuities, or cash. That’s where reverse mortgages come into the picture. Designed for homeowners 62 and older (or 55+ for some proprietary loans), a reverse mortgage may convert a portion of your home equity into usable funds.

If you’re considering a reverse mortgage in California, it’s important to make sure you understand what they are, how they work, and what California-specific laws protect you.

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

What is a reverse mortgage?

A reverse mortgage is a home loan that may allow older homeowners to convert part of their home equity into cash without taking on additional mortgage payments.1 The loan balance grows over time as interest and fees are added, and repayment typically happens when the home is sold, the borrower moves out, the last borrower passes away, or the borrower fails to meet other loan obligations.

Reverse mortgages are especially relevant in California. The state has a strong housing market and higher-than-average home values, which means many seniors have built substantial equity, even if their retirement income feels tight. In fact, California homeowners often hold far more equity than the national average, making reverse mortgages a more flexible option here than in many other states. To learn more, please visit the CFPB’s Reverse Mortgage: A Discussion Guide

Learn more about what a reverse mortgage is and how it works.

1The 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.

Types of reverse mortgages


There are several types of reverse mortgages, each designed to meet different homeowner needs, especially in a high-value market like California. Here’s how they differ:

Home Equity Conversion Mortgage (HECM)

A HECM is the most common type of reverse mortgage offered by private lenders and is insured by the Federal Housing Administration (FHA). HECMs offer flexible payout options, including a lump sum payment, monthly payments, a line of credit, or a combination of those options. Loan amounts are capped by the FHA limit ($1,249,125 in 2026), and HUD-approved counseling is required.

Proprietary Reverse Mortgages

Private reverse mortgages are offered by individual lenders and not insured by the FHA. These loans are often used for higher-value homes that exceed FHA limits, making them particularly relevant in California. Terms and eligibility varies by lender, but counseling is typically required.

Jumbo Reverse Mortgages

This is a type of proprietary reverse mortgage designed for high-value properties. Jumbo loans, like the HomeSafe loan from Finance of America, may allow eligible homeowners to access more equity than a HECM since they aren’t subject to FHA loan limits.

Example: An older homeowner in Palo Alto with a mortgage-free $4 million home would be limited to borrowing $1,249,125 with a HECM—but could potentially access as much as 60% of the value with a jumbo reverse mortgage.

*Only available in certain states. Contact us for a complete list of availability.

Single-Purpose Reverse Mortgages

These are less common loans offered by state or local governments or nonprofit organizations. Funds must be used for a specific purpose—such as home repairs or paying past-due property taxes—and availability is limited. They generally provide smaller loan amounts and come with stricter usage rules.

California-specific reverse mortgage rights

California adds extra borrower safeguards on top of federal reverse mortgage rules and safeguards. These rules give homeowners more time, transparency, and language access throughout the process. Those rules include:

  • Mandatory disclosures before applying: Borrowers must receive a Reverse Mortgage Worksheet Guide and Important Notice to Reverse Mortgage Loan Applicants before submitting an application. The counselor provides the Worksheet if counseling occurs before lender contact. Borrowers must certify they received these documents.
  • Seven-day cooling-off period: Counseling must be completed at least seven days before a lender may assess any fees or accept a “final and complete” application (meaning one with enough information to make a credit decision). This waiting period gives borrowers time to fully consider their options without pressure.
  • Federally mandated safeguards: When applying for a HECM, safeguards include mandatory HUD-approved counseling, limits on first-year loan proceeds, protections for eligible non-borrowing spouses, and non-recourse rules that limit the repayment to the value of the home.

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. 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.

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

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Advantages of reverse mortgage loans in California 

For many California homeowners, a reverse mortgage may provide flexibility and breathing room in retirement—especially given the high cost of living in the ‘Golden State’. Here are a few of the advantages to a reverse mortgage:

Eliminate monthly mortgage payments1

Many California seniors still carry mortgage debt into retirement. A reverse mortgage does not require you to make monthly mortgage payments, as long as you continue paying property taxes, insurance, maintain the home, and comply with loan terms.

Access tax-free funds2

Proceeds from a reverse mortgage generally aren’t considered taxable income by the federal government. Funds may be used for everyday living expenses, healthcare costs, home improvements, or other financial needs.

Stay in your home3

You can retain ownership of your home and continue living in a familiar setting while accessing your equity, as long as loan obligations such as property taxes, insurance, and maintenance are met.

Non-recourse loan protection4

HECM reverse mortgages are non-recourse loans, meaning neither you nor your heirs will ever owe more than the home’s value at the time of repayment. If the loan balance exceeds the property value, FHA insurance covers the difference on insured loans up to the maximum claim amount.

Flexible payout options

HECM reverse mortgages offer several ways to receive funds, including a lump sum, monthly payments, a line of credit that grows when unused5, or a combination of options that fits your needs.

Maximize California’s high property values

California’s higher than average home prices may allow eligible homeowners to access more equity than in many other states, especially with a proprietary, jumbo reverse mortgage loan.

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1The 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.

2This is not tax advice; borrowers should consult a tax professional.

3The 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

4Non-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.

5Available only for HECM reverse mortgage loans with the line of credit option selected by the borrower.

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

Drawbacks and risks to consider with a reverse mortgage in California

A reverse mortgage may help some homeowners improve their financial flexibility, but reverse mortgages are not without risks. Here are a few drawbacks to keep in mind while deciding if it’s the right fit for you:

  • Equity decreases over time: Interest and fees are added to the loan balance, which means the equity in your home typically shrinks the longer the loan is in place.
  • Less to leave to heirs: Because the loan balance grows, there may be less equity available for heirs when the home is sold, which could affect inheritance plans.
  • Possible impact on Medi-Cal eligibility: Reverse mortgage funds may count as assets if not spent properly, which could affect eligibility for Medi-Cal or other needs-based programs.
  • Ongoing homeowner responsibilities: You’re still responsible for property taxes, homeowners insurance, homeowner associate fees, and keeping the home in good condition. Falling behind on these obligations could put the loan at risk of default or foreclosure.
  • Fees may add up: Reverse mortgages often include upfront and ongoing fees, such as origination costs, mortgage insurance, and servicing fees, which increase the overall loan balance.

Depending on your goals, alternatives to a reverse mortgage like a HELOC, home equity loan, downsizing, or using life insurance cash value may offer more flexibility or lower long-term costs.

California reverse mortgage eligibility requirements 

To be eligible for a reverse mortgage in California, at a minimum, homeowners must meet several age, property, and financial criteria. Keep in mind the eligibility requirements can vary depending on whether you take out a HECM or proprietary reverse mortgage loan.

Age requirement

At least one borrower must be 62 years or older for a HECM. If there’s a younger spouse, they may be listed as an eligible non-borrowing spouse, which helps protect their right to remain in the home if the older borrower passes away first, as long as loan requirements are met. Proprietary reverse mortgages may offer lower age requirements. Learn more about non-borrowing spouse protections.

Live in the home as your primary residence

The property must be your principal residence, meaning you live there most of the year. Second homes and investment properties are not eligible for a reverse mortgage. If you leave your home for more than 12 months to live elsewhere, your loan will come due.

Have sufficient equity in your home

You don’t need to own your home outright, but you must have enough equity to pay off any existing mortgage and still generate meaningful proceeds. The amount of required equity depends on your age, interest rates, and appraised home value.

Complete mandatory counseling

Before a lender may process your application, you must complete a session with a HUD-approved housing counselor. Your counselor will explain how reverse mortgages work, review alternatives, and ensure you understand the financial and long-term implications of the loan. Federal law requires this step for HECMs and most proprietary reverse mortgage lenders include this requirement as well.

Pass a financial assessment

While there is no minimum credit score, lenders do complete a financial assessment to confirm you’re able to keep up with ongoing obligations such as property taxes, homeowners insurance, and basic home maintenance. If needed, part of the loan proceeds may be set aside to help cover these costs. Learn more: Can I get a reverse mortgage if I have bad credit?

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

How much can I get for a reverse mortgage in California?

The amount you may receive from a reverse mortgage depends on several factors. While California’s high home values often work in a borrower’s favor, proceeds are still calculated using a structured formula that considers:

  • Your age: Older borrowers are typically eligible for a higher percentage of their home’s value, since the loan is expected to be outstanding for a shorter period of time.
  • Current interest rates: Lower interest rates generally result in higher available proceeds, while higher rates reduce the amount that may be accessed.
  • Appraised home value: For FHA-insured HECM loans, the maximum value used in the calculation is capped at $1,249,125 in 2026, even if your home is worth more. Proprietary reverse mortgages may allow higher-value homes to access additional equity.
  • Principal Limit Factor (PLF): This is the percentage of your home’s value that may be borrowed. The PLF is based on your age and current interest rates and is set by FHA guidelines.
  • First-year disbursement limit (the 60% rule): With HECMs, borrowers may access no more than 60% of their available principal limit during the first 12 months of the loan. Exceptions may apply if a higher amount is required to pay off an existing traditional mortgage or meet mandatory obligations.
  • Existing mortgage balance and fees: Any existing traditional first-lien mortgage must be paid off at closing using loan proceeds. Factors like whether you have a current mortgage that must be repaid, closing costs, fees, and mortgage insurance may reduce the net amount available.

Because every situation is different, a personalized estimate is the best way to understand how much equity you may access and when.

Reverse mortgage application process in California

For eligible borrowers, funding is typically available within 30–45 days of the initial call.

1. Talk to a specialist

30-60 minutes

You’ll speak with a reverse mortgage specialist who can answer every question and give you a clear picture of what’s possible—completely free, with no obligation to apply.

2. Complete required counseling

1-2 hours

All reverse mortgages require a session with an independent counselor before you apply. This person works for you—not us. They’ll walk you through every option, every cost, and every alternative so you feel fully informed. This step protects you and is required by law for HECMs.

3. Submit your application

15 minutes

A dedicated specialist walks you through each part of the paperwork. You’ll always know where things stand and what’s coming next.

4. Home appraisal and review

1-3 weeks

An appraiser visits to determine your home’s current market value. This confirms your loan amount, and must be performed by a FHA-approved counselor for HECMs. Your application is submitted to underwriting to determine whether you meet loan requirements at the same time.

5. Loan approval

2-3 days

If approved, you’ll receive confirmation that your loan is approved and ready to close. Your loan officer will walk you through the final numbers and make sure all your questions are answered before signing.

6. Funds arrive

1 hour + 3 days

After signing, there’s a 3-business-day waiting period. During this time, you can cancel for any reason. Once that period ends, your funds are delivered based on how you chose to receive them. You can cancel within that time, no questions asked.

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Why choose Finance of America for your reverse mortgage in California?

Choosing a reverse mortgage lender is a big decision, and who you work with matters. At Finance of America, we’re committed to making sure California homeowners feel informed and supported every step of the way—not rushed or pressured into a one-size-fits-all solution. Our California specialists have a deep understanding of the state’s unique regulatory requirements, from San Francisco’s premium homes to Central Valley’s agricultural communities and beyond. We offer both traditional HECM loans and proprietary reverse mortgage options, giving homeowners with higher-value properties access to solutions above FHA limits.

Craig

Finance of America customer

Dennie & Hassan

Finance of America customers

Frequently asked questions

The amount you may borrow depends on your age, current interest rates, and your home’s appraised value. For FHA-insured HECM loans, the maximum home value is capped at $1,249,125 in 2026. Proprietary jumbo reverse mortgages may allow eligible homeowners with higher-value properties to access additional equity.
You remain the owner of your home with a reverse mortgage. As long as you continue living in the home as your primary residence and keep up with property taxes, homeowners insurance, and basic maintenance, you may stay in your home. The loan typically only becomes due if you move out permanently, sell the home, or do not meet those obligations.

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.
Yes, a reverse mortgage may be available on condos in California, but approval depends on the property meeting specific requirements. The condo project must be approved by the FHA or otherwise eligible under reverse mortgage guidelines. This typically means the homeowners association is financially stable, maintains adequate insurance, and meets occupancy and reserve standards.
There are several alternatives to a reverse mortgage in California, depending on your financial situation. Options include a HELOC, home equity loan, or cash-out refinance, which provide access to home equity but require monthly payments and income qualification. Eligible homeowners may also benefit from California’s Property Tax Postponement Program, which defers property tax payments. Another option is downsizing, which may free up equity while reducing overall housing costs.
Costs and fees of a reverse mortgage may include an origination fee, appraisal, closing costs, and—on FHA-insured loans—mortgage insurance premiums. These costs are typically rolled into the loan, reducing the net proceeds available rather than requiring out-of-pocket payment. There are also ongoing costs, such as property taxes, insurance, and costs to maintain the home.
When the last borrower passes away or permanently moves out, a HECM loan becomes due. Heirs may sell the home to repay the balance, refinance it if they want to keep it, or walk away. Neither your heirs nor your estate would owe more than the home’s value at the time of repayment.
A reverse mortgage does not generally impact Social Security retirement benefits because it is not a needs-based program. Loan proceeds are not considered income, but holding money in your account may impact needs based program like SNAP (CalFresh) and may increase Medi-Cal premiums.
California’s higher home values often increase potential loan amounts. However, lenders still complete a financial assessment to confirm borrowers can keep up with ongoing costs such as property taxes, insurance, and home maintenance.  This means the higher cost of living may have an impact on reverse mortgage eligibility.