Reviewed July 2026 by Scott Mason, Mortgage Advisor, NMLS #2576892
What is a reverse mortgage?
A reverse mortgage is a loan secured by a homeowner’s primary residence. The most common federally insured option is a Home Equity Conversion Mortgage, or HECM. Instead of making a required monthly principal-and-interest payment, an eligible borrower may receive proceeds as a lump sum, line of credit, monthly payment, or a combination, depending on the selected program and complete loan review.
Who may be eligible for a HECM?
HECMs are generally for homeowners age 62 or older who occupy the home as a primary residence. The home, the borrower’s age, existing liens, property value, current interest rates, program limits, financial assessment, counseling, and other requirements all affect whether a specific option is available and how it could be structured.
Important things to understand before you decide
You retain ownership
With a HECM, the borrower keeps title to the home. The loan is secured by the property, and the borrower can sell or move, subject to the loan terms and payoff requirements.
There is no required monthly principal-and-interest payment
That does not mean there are no ongoing costs. The borrower must continue meeting the loan obligations for occupancy, property taxes, homeowners insurance, applicable HOA charges, and property maintenance.
An existing mortgage usually must be addressed
Existing liens generally need to be paid off through the transaction or otherwise satisfied at closing. The amount owed can affect the available proceeds and whether the structure is workable.
Independent counseling is required
A HUD-approved HECM counseling session is required before a HECM application can proceed. Counseling is designed to help you understand the program, responsibilities, costs, alternatives, and questions to discuss with family or trusted advisors.
How available proceeds are determined
There is no universal reverse-mortgage amount. The available principal limit can depend on the youngest borrower or eligible non-borrowing spouse, home value, current interest rates, existing liens, the applicable HECM limit, selected payment option, property type, and the complete program review. A personalized illustration is more useful than a headline estimate.
How proceeds may be received
Depending on the reverse-mortgage product and the borrower’s circumstances, proceeds may potentially be received as a single disbursement, a line of credit, monthly advances, or a combination. The payment option, interest-rate structure, costs, and effect on the remaining loan balance should be reviewed before a decision is made.
HECM for Purchase
A HECM for Purchase may allow an eligible borrower to buy a new primary residence and obtain a HECM in one transaction. It can be worth discussing when someone plans to downsize, relocate, move closer to family, or choose a home that better fits the next stage of life. The borrower must provide the required funds for the purchase, closing costs, and other obligations, and the property and transaction must satisfy current program requirements.
Questions for heirs and family
A reverse mortgage is also a family conversation. After the last borrower dies, sells the home, or no longer occupies it as required, the loan becomes due and payable. Heirs can review options such as repaying the balance, selling the home, or other choices available under the loan and applicable rules. They should read the actual servicer notice and seek legal, tax, housing-counseling, or financial guidance when appropriate.
When a reverse mortgage may be worth exploring
- You plan to remain in your primary residence and want to review how home equity could support retirement cash flow or a major life transition.
- You are considering a downsizing or relocation purchase and want to compare a HECM for Purchase with a traditional mortgage or cash purchase.
- You want to compare the effect of a reverse mortgage, refinance, home-equity option, asset drawdown, or another alternative on your actual plan.
When it may not be the strongest fit
- You expect to move soon, do not plan to keep the home as your primary residence, or do not have a workable plan for ongoing property charges and upkeep.
- You have goals for the home or estate that conflict with the costs, balance growth, or repayment timing of a reverse mortgage.
- A conventional refinance, home-equity option, sale, downsizing plan, public-benefit review, or another financial strategy better supports your needs.
Independent resources to review
Take time to review independent government information before making a decision. A reverse mortgage should be evaluated alongside the homeowner’s budget, property obligations, family plans, tax considerations, benefits, and alternatives.