Reverse Mortgages

A HECM is a reverse mortgage available to eligible homeowners age 62 and older that lets you access a portion of your home equity without a required monthly mortgage payment. Instead of you paying down the loan, the balance grows over time and is repaid when it becomes due, generally after sale, moving out or death. Eligible surviving spouses or co-borrowers may have protections that delay repayment.

The Home Equity Conversion Mortgage (HECM) is insured by FHA. There are also proprietary “jumbo” reverse products for higher-value homes.

Available reverse-mortgage options can include FHA-insured HECMs and proprietary reverse programs, subject to current program and lender requirements. These products have different requirements; HECM protections and rules should not be assumed to apply to proprietary products.

A reverse mortgage lets an eligible homeowner convert part of the equity in the home into loan proceeds without requiring monthly principal-and-interest mortgage payments while applicable loan requirements are met. The borrower still owns the home and remains responsible for applicable property taxes, homeowners insurance, maintenance and the other obligations of the loan. For a HECM, any existing mortgage or other required liens generally have to be paid off at closing, which can be done with the reverse-mortgage proceeds if enough funds are available. If available HECM proceeds are insufficient to pay the required mortgage payoff, the borrower needs other funds to cover the difference.

The payment options and credit-growth rules below describe FHA-insured HECMs. Proprietary reverse mortgages have their own terms.

With an adjustable-rate HECM, available proceeds can generally be taken as a line of credit, monthly term payments, tenure payments, or a combination of a line of credit and monthly payments. A fixed-rate HECM generally uses a single lump-sum structure. How much is available depends on factors including the youngest applicable borrower or eligible non-borrowing spouse, the expected interest rate and the home value used in the HECM calculation.

The HECM line-of-credit feature is particularly different from a traditional HELOC. Unused HECM borrowing capacity can grow over time. HUD’s formula increases the HECM principal limit monthly. Unused line-of-credit borrowing capacity can grow as a result, subject to applicable disbursement limits. That growth is not interest being earned in an account and it is not investment income. It is an increase in future borrowing capacity, not a growing cash account owned by the borrower. Advances add to the loan balance. Interest, mortgage insurance and applicable charges can also increase the outstanding balance even when no new cash is drawn.

A reverse mortgage can therefore be used for more than simply taking cash out of a house. It can replace an existing mortgage, create access to a future reserve, provide scheduled monthly proceeds, fund a one-time need, or combine those approaches. The useful comparison is how much equity is being converted into debt, what funds remain available later, and how the growing loan balance affects the equity that will ultimately remain in the home.

An eligible HECM for Purchase can also help finance a new primary residence. The borrower must provide the required funds based on a personalized calculation.

This is important: a reverse mortgage does not transfer ownership. You still own your home. You’re still responsible for:

• Property taxes
• Homeowners insurance
• HOA dues (if applicable)
• Maintaining the home in reasonable condition

Falling behind on any of those can trigger a loan default — same as with a regular mortgage.

No required monthly mortgage payment does not mean no cost. Interest, mortgage insurance and applicable fees increase the balance; financial assessment and property-charge requirements still apply.

The amount available (called the “principal limit”) depends on:

• The youngest borrower’s or eligible non-borrowing spouse’s age
• The home’s appraised value and applicable program limit
• Expected interest rate and required costs

A personalized calculation is needed.

For 2026, the HECM maximum claim amount is $1,249,125. That is not the amount you can borrow or receive.

For an FHA-insured HECM, the borrower has no personal liability for the outstanding loan balance. The lender’s recovery is limited to the mortgaged property, and it cannot obtain a deficiency judgment against the borrower. If the loan balance eventually exceeds the property value, the borrower or estate is not required to make up that deficiency from other assets simply because the home is worth less than the HECM balance. FHA mortgage insurance is what supports that protection.

That does not mean the loan never has to be repaid or that heirs automatically receive the home free and clear. A HECM generally becomes due and payable after the last borrower dies, permanently leaves the home, or another applicable due-and-payable event occurs. If the property is worth more than the debt, it can be sold, the HECM can be repaid, and the remaining equity belongs to the borrower or estate. If the debt is greater than the property value, HUD has specific rules that can allow the debt to be resolved based on the property’s appraised value rather than requiring the deficiency to be paid from other family assets. When a HECM is due and payable after the last borrower’s death and the balance exceeds the home’s value, HUD rules can permit a qualifying sale for at least 95% of the appraised value to satisfy the debt. The servicer must confirm the applicable appraisal, sale requirements and deadlines.

The result also depends on who is still living in the home. A surviving co-borrower can generally continue the HECM as long as the loan requirements continue to be met. An eligible non-borrowing spouse may qualify for a repayment deferral under HUD’s rules, but does not become a borrower or receive further loan advances during that deferral. Applicable occupancy and property-charge requirements still matter.

Non-recourse protection should therefore be understood as protection against a deficiency beyond the property under the HECM rules, not as a promise that every heir or occupant can remain in the property without resolving the mortgage.

HECM borrowers generally must complete independent counseling with a HUD-approved HECM counselor before the lender processes the application. The lender must receive the required signed counseling certificate. A limited counseling waiver may apply to a qualifying HECM-to-HECM refinance.

The purpose is broader than confirming eligibility. The counselor is expected to help the borrower understand the available HECM payment options, loan costs, how the balance and remaining equity can change over time, ongoing obligations such as property taxes and insurance, circumstances that can make the loan due and payable, implications for spouses and heirs, and alternatives to a reverse mortgage. HUD also requires the counseling process to remain independent rather than steering the borrower toward a particular HECM lender or product.

That distinction is important because a reverse mortgage changes both cash flow today and the equity available later. Counseling is intended to make sure those tradeoffs are evaluated before the borrower commits to the loan, not simply to satisfy a paperwork requirement.

Proprietary reverse mortgages are different. They are not automatically governed by every HECM counseling rule, and individual programs can impose their own counseling requirements. Those requirements have to be checked against the actual proprietary program rather than assumed from FHA’s HECM rules.