How a Reverse Mortgage Works

A reverse mortgage is a home loan that allows eligible homeowners to access a portion of their home equity without taking on a required monthly mortgage payment.

The homeowner keeps title to the home, and the loan balance generally grows over time as interest and fees are added. The loan is typically repaid when the home is sold, the borrower permanently moves out, or the last borrower passes away. Homeowners must continue to meet the loan requirements, including paying property taxes and homeowners insurance and maintaining the property.

HECM reverse mortgages are available to eligible homeowners age 62+, while some proprietary reverse mortgage programs may be available beginning at age 55.

What Makes a Reverse Mortgage Different?

Who May Qualify for a Reverse Mortgage?

Eligibility depends on the type of reverse mortgage, the borrower’s age, the property, available home equity, and the program’s financial requirements.

• HECM: generally available to eligible homeowners age 62 and older
• Proprietary reverse mortgages: some programs may be available beginning at age 55
• Home equity and property type: the amount available will depend on factors such as age, home value, existing mortgage balance, interest rates, and program guidelines

Not every homeowner will qualify for every program, which is why comparing the available options is important.

How Can Reverse Mortgage Funds Be Received?

Depending on the program and loan structure, reverse mortgage proceeds may be available in several different ways.

The available options vary by loan type, so the best structure depends on the homeowner’s goals and the specific program.

What Are You Still Responsible For?

A reverse mortgage removes the requirement for a monthly mortgage payment, but homeowners still have important responsibilities.

If these obligations are not met, the loan could become due and payable.

When Does a Reverse Mortgage Become Due?

A reverse mortgage is generally repaid when one of the following occurs:

1. The home is sold
2. The borrower permanently moves out
3. The home is no longer the borrower’s primary residence, when required by the program
4. The last borrower passes away
5. The borrower does not meet ongoing loan obligations, such as paying property taxes, maintaining homeowners insurance, or keeping the property in acceptable condition

At that point, the loan is typically repaid from the sale of the home, a refinance, or other available funds.

What Happens to the Home and Your Heirs?

A reverse mortgage does not mean giving up ownership of the home. The borrower keeps title, and any remaining equity belongs to the homeowner or the estate.

Why Do Homeowners Use a Reverse Mortgage?

Homeowners use reverse mortgages for different reasons depending on their goals, finances, and stage of retirement.

HECM vs. Proprietary Reverse Mortgages

There are different types of reverse mortgages, and the best fit depends on the homeowner’s age, property value, goals, and financial situation.

The important part is not choosing a product first — it’s comparing the available options and determining which structure best fits the homeowner’s goals.

Is a Reverse Mortgage Right for Everyone?

A reverse mortgage can be a useful retirement planning tool, but it is not the right solution for every homeowner.

• It may be worth considering if you plan to remain in the home for a meaningful period of time
• It can be useful when improving cash flow or accessing home equity is part of the goal
• Homeowners should be comfortable with the fact that the loan balance generally increases over time
• The impact on remaining home equity and heirs should be understood
• Other options, such as selling, downsizing, refinancing, or using other assets, may also deserve consideration

The goal should be to understand the numbers, compare the alternatives, and decide whether a reverse mortgage fits your overall retirement plan.

Common Questions About Reverse Mortgages

Do I still own my home with a reverse mortgage?
Yes. The homeowner keeps title to the property, as long as the loan requirements are met.

Do I have to make monthly mortgage payments?
No required monthly mortgage payment is generally due, but homeowners must continue paying property taxes, homeowners insurance, and maintaining the property.

Can I use a reverse mortgage to buy a home?
Yes. Certain reverse mortgage programs can be used to purchase a new primary residence.

What happens if the loan balance becomes greater than the home’s value?
Reverse mortgages are generally non-recourse loans, meaning the borrower or heirs are not responsible for paying more than the home is worth, subject to program terms.

Can my heirs keep the home?
Yes. Heirs can typically keep the home by paying off or refinancing the reverse mortgage balance, or they can sell the property and keep any remaining equity.

Get Clear Guidance Before You Decide

Reverse mortgages can be valuable tools, but they work best when the homeowner understands the options, tradeoffs, and long-term impact. Our goal is to help you make an informed decision based on your situation — not pressure you into a product.