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What Is A Reverse Mortgage

A Home Equity Conversion Mortgage, (HECM), commonly known as a reverse mortgage loan, is a Federal Housing Administration (FHA) insured loan1 that allows borrowers, who are 62 years and older, access to a portion of their home equity without having to make monthly mortgage payments.2 If you have sufficient equity in your home, you may be able to get the cash you need to help supplement retirement, home renovations, pay for medical expenses, or put aside as a rainy day fund. You can use the money however you choose.

What are the benefits?

With a reverse mortgage, there are no monthly mortgage payments2. If there’s a mortgage on your home, it must be paid off using the proceeds from your reverse mortgage loan. If you don’t have a current mortgage, it increases the amount of money you may be eligible to receive.

What are the requirements?

All reverse mortgage applicants will undergo a financial assessment to verify income, taxes, and credit history. The Department of Housing and Urban Development (HUD) requires a financial assessment to evaluate the borrower’s ability to meet their financial obligations and mortgage requirements.3

A reverse mortgage doesn’t require a minimum credit score, your credit history is reviewed for current and/or outstanding credit obligations to determine your debt-to-income ratio. In some cases, the FHA requires a portion of the loan proceeds to be put into a Life Expectancy Set Aside (“LESA”), to assist and ensure the borrower can pay required property taxes and homeowners insurance.

Another requirement of the loan is that you will need to continue to reside in the home as your primary residence, continue to pay property taxes and homeowner’s insurance and maintain the home.

How much can I get?

The amount of funds you can receive is determined by the following:

  • The age of the youngest borrower (or non-borrowing spouse)4,
  • The lesser of the appraised value of your home, sale price, or the FHA national lending limit, ($1,089,300 for 2023),
  • Current interest rates and,
  • The remaining balance of your existing mortgage (if applicable) and any other mandatory obligations.3

You can use these funds to complete home improvements, consolidate other debt, improve your cash flow, or have a ‘safety net’ for those unplanned expenses.

How can you get your money?

Borrowers can select to receive their funds in flexible disbursement5 options that can be used immediately:

  • A line of credit that will grow over time6 and can be accessed on an as-needed basis
  • A lump sum of cash at closing (only available on fixed-rate loans)7
  • Tenure – monthly payments for the life of the loan
  • Term – monthly payments for a specific number of years

If you are interested in finding out more information or if you qualify for a reverse mortgage, call (855) 218-4718 to speak with a licensed reverse mortgage advisor.


1As required by the Federal Housing Administration (FHA), you will be charged an up-front mortgage insurance premium (MIP) at closing and, over the life of the loan, you will be charged an annual MIP based on the loan balance.
2Your current mortgage, if any, must be paid off using the proceeds from your HECM loan. You must still live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.
3Mandatory obligations are those fees and charges, as defined by HUD, incurred with the origination of the HECM loan that are paid at closing or during the first 12-month disbursement period. This includes but is not limited to: the loan origination fee; counseling fee; up-front MIP; third-party closing costs; customary fees and charges for warranties, inspections, surveys, engineer certifications; repair set-asides; set-aside for property taxes and insurance; and delinquent federal debt.
4A spouse must meet the following requirements to be considered eligible: 1) Be the spouse of the reverse mortgage borrower at the time of loan closing and remain the spouse of the borrower for the duration of the borrower’s lifetime. 2) Be properly disclosed to the lender at origination and specifically named as a Non-Borrowing Spouse in the loan documents. 3) Occupy, and continue to occupy, the property securing the reverse mortgage as the principal residence.
5The funds available to you may be restricted for the first 12 months after loan closing. In addition, you may be required to set aside additional funds from the loan proceeds to pay for taxes and insurance.
6The reverse mortgage loan balance grows at the same rate as the available line of credit. Line of credit growth occurs and is only a benefit when a portion of the line of credit is not used. The unused line of credit grows over time and more funds become available during the life of the loan.
7This disbursement option is only available for a fixed rate loan.


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