What is a reverse mortgage?
A reverse mortgage is a special type of home loan for homeowners who are 62 or older. The most common federally insured reverse mortgage is the Home Equity Conversion Mortgage, or HECM, which is available through FHA-approved lenders.
How a reverse mortgage works
With a reverse mortgage, the lender advances funds to the borrower rather than the borrower making required monthly mortgage payments on the loan balance. The homeowner must still continue meeting program obligations such as living in the home as a principal residence and paying property taxes, homeowners insurance, and other required property charges.
- No required monthly mortgage payment on the borrowed balance while obligations are met
- Homeowner continues to live in the home as a principal residence
- Property taxes, homeowners insurance, and required property charges must stay current
- Loan balance grows over time as funds are used and interest accrues
Who may benefit from a reverse mortgage?
Reverse mortgages are often considered by older homeowners who want to supplement retirement cash flow, pay off an existing mortgage, finance home improvements, cover healthcare costs, or create a line of credit backed by home equity. CFPB notes that reverse mortgages can be used in different ways, but they should be considered carefully because they are complex loans.
- Homeowners age 62 and older
- Retirees looking for added cash flow flexibility
- Borrowers who want to eliminate an existing mortgage payment
- Homeowners planning for healthcare, repairs, or aging-in-place needs
When the loan becomes due
A reverse mortgage generally becomes due and payable when the last surviving borrower dies, sells or transfers the home, or no longer occupies the home as a principal residence. Federal regulations describe reverse mortgages as nonrecourse obligations that become due after those kinds of events, absent default.
- When the borrower dies
- When the home is sold or transferred
- When the borrower permanently moves out
- When program obligations are not met
Eligibility basics
HECM reverse mortgages are generally for homeowners age 62 or older who occupy the property as a principal residence. HUD also requires HECM counseling before application so borrowers can better understand the loan and its alternatives.
- At least 62 years old
- Principal residence occupancy required
- Homeowner must continue paying taxes, insurance, and property charges
- HUD-approved counseling is required before closing a HECM
Eligible property types
Reverse mortgages can be available on several property types, but the home must meet FHA property standards and program rules.
- Single-family homes
- Two- to four-unit properties where the borrower occupies one unit
- HUD-approved condominiums
- Eligible FHA-compliant manufactured homes
Current HECM limit: HUD’s HECM maximum claim amount for calendar year 2026 is $1,249,125, replacing much older figures that still appear on some websites.
How funds may be received
HECM borrowers may be able to receive proceeds in different ways, depending on the program structure and financial goals. Common options include a lump sum, monthly payments, a line of credit, or a combination. HUD describes HECM funds as usable for home maintenance, repairs, or general living expenses.
- Lump-sum distribution in eligible structures
- Monthly payment options
- Line of credit access
- Combination payout structures
How much may be available?
The amount available through a reverse mortgage depends on several factors, including the age of the youngest borrower or eligible non-borrowing spouse, current interest rates, the home’s value, and the applicable FHA maximum claim amount. That means reverse mortgage proceeds are individualized rather than one-size-fits-all.
- Age of the youngest borrower matters
- Home value matters
- Current interest rates matter
- FHA maximum claim amount matters
Important protections and cautions
Reverse mortgages are generally nonrecourse loans, which means neither the borrower nor the estate typically owes more than the home’s value when the loan is repaid. At the same time, CFPB advises borrowers to proceed carefully, understand alternatives, and talk seriously with a federally approved housing counselor before moving forward.
- HECMs are generally nonrecourse
- Borrowers should understand alternatives before closing
- Housing counseling is a key consumer protection step
- Taxes, insurance, and occupancy remain ongoing obligations
Need help choosing the right mortgage?
We help Florida homeowners compare reverse mortgage options based on age, home equity, property type, and retirement goals. If you want to know whether a reverse mortgage is the right fit, we can help you compare the numbers.
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