What is a reverse mortgage?

A reverse mortgage lets eligible homeowners borrow against home equity. The most common type is the FHA-insured Home Equity Conversion Mortgage (HECM), for borrowers age 62 or older. Other reverse mortgage products have different eligibility rules.

With a HECM, monthly principal and interest payments generally are not required while the loan remains in good standing. Interest and fees are added to the amount owed, so the balance generally grows and remaining equity can decrease.

You still have homeowner responsibilities. You must meet occupancy requirements, pay property taxes and insurance, maintain the home, and meet other loan obligations. Failure to do so can cause the loan to become due and may lead to foreclosure.

HECM is one option. It is not the only option.

Proprietary reverse mortgages are private programs, separate from FHA-insured HECMs. They may suit higher-value homes or borrowers whose needs fall outside HECM guidelines. Selected programs start at age 55 in eligible states; higher minimum ages can apply. Availability for your state, property and scenario must be confirmed.

Fixed-rate lump sum

Access proceeds in one disbursement at closing. Compare available cash, interest and closing costs with a HECM.

Reusable line of credit

Selected adjustable-rate programs combine upfront cash with a reusable credit line. Review draw and repayment rules, rate changes and state availability.

Equity-preservation option

Some programs offer a contractual feature intended to preserve a portion of equity at the end of the loan, subject to specific terms. This can affect proceeds and does not guarantee a fixed inheritance.

Selected proprietary programs offer different loan-size limits and condominium eligibility criteria. A condo still requires property and project review. These loans are not FHA-insured, and HECM protections and features should not be assumed to apply. Compare program-specific repayment, spouse, counseling and non-recourse provisions.

Responsibilities remain. A proprietary reverse mortgage is still a loan secured by your home. Interest and charges can increase the balance; taxes, insurance, maintenance, occupancy and other loan obligations continue.

HECM eligibility: start with the whole household.

Age, equity and home

HECM borrowers must be at least 62. The home must be a principal residence and meet property requirements. Existing mortgage debt must be paid off at closing, using proceeds and other funds if needed.

Financial review

The lender reviews credit and financial capacity to meet ongoing obligations. Available proceeds depend on factors including age, interest rates, home value and applicable program limits.

Independent counseling

HECM counseling through a HUD-approved agency is required. Discuss costs, alternatives, spouse protections and the effect on your household before committing.

How HECM funds and repayment work

Depending on the HECM structure, proceeds may be available as a lump sum, a line of credit, scheduled payments, or a combination. Not every option is available with every interest-rate structure.

The loan generally becomes due when the last borrower dies, sells, or permanently leaves the home, or when other obligations are not met. Eligible non-borrowing spouse protections may apply under specific conditions; they are not automatic permission for every household member to remain indefinitely.

Compare the full cost, protections and alternatives.

Consider origination and closing costs, mortgage insurance, accruing interest, how long you expect to stay, remaining equity and plans for heirs. Compare a reverse mortgage with a HELOC, a refinance, downsizing, or using other resources. A HECM is a loan secured by your home, not a government benefit or free money.

You retain ownership subject to the mortgage. HECMs have non-recourse protections; discuss payoff and inheritance options with the lender and counselor rather than assuming heirs must keep or surrender the home.

Questions to bring to Kit and Mike

  • Who lives in the home, and what are your long-term housing plans?
  • What mortgage balance remains, and how would you cover ongoing property expenses?
  • Are you seeking access to equity, a different payment structure, or a new home?
  • How would costs, moving, and inheritance plans affect the decision?

HECM for Purchase may also be an option for eligible buyers, with a required cash investment and program review. Ask about current availability and execution. Product availability, state eligibility and terms must be confirmed through Neighborhood Mortgage; this guide does not establish approval.

Independent resources

HUD: FHA reverse mortgages (HECM)
CFPB: What is a reverse mortgage?
CFPB: Eligibility and counseling
CFPB: Borrower responsibilities

Educational information reviewed October 29, 2026. HECM requirements differ from proprietary reverse mortgage programs. Not a commitment to lend.