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How it works, step by step
The loan replaces your payment, not your ownership
A reverse mortgage pays off what you still owe and converts remaining equity into cash — and from then on there’s no monthly mortgage payment. You remain on title, living in your home. Interest accrues on the balance instead of being paid monthly; the loan settles when you sell, move out permanently, or pass away.
You choose the shape of the money
A lump sum at closing, a line of credit you draw as needed, monthly draws that behave like income, or a combination. The right shape depends on what the money is for.
Who qualifies
Age 62 or older, primary residence only, and an existing mortgage balance under roughly 50% of the home’s value — the equity does the qualifying, which is why it works at any credit score. Cash-at-closing requests run up to $5 million, with your equity setting what’s actually available.
Counseling comes first — and that’s a feature
Federal rules require a session with an independent, HUD-approved counselor before any HECM closes. We point you to approved counselors and encourage your family to sit in.
Two obligations remain
Property taxes and homeowners insurance must stay current, and the home must stay your primary residence. A reverse mortgage only works for people who can keep those things true.
How it ends
When the last borrower leaves the home, the loan settles — usually through the home’s sale. Because HECMs are non-recourse, neither you nor your heirs ever owe more than the home’s value: heirs keep any remaining equity, or walk away owing nothing.
How much can you get?
Proceeds depend on your age, your home’s value, and FHA’s age-based factors — not a simple LTV percentage, so anyone quoting a flat number off the cuff is guessing. A real estimate needs three inputs: home value, age, and mortgage balance. Share them on a quick call and you’ll get a conservative estimate net of program costs.
The honest pros and cons
| What it gives you | What it costs you |
|---|---|
| No monthly mortgage payment for as long as you live in the home | The loan balance grows over time as interest accrues |
| Cash from equity without selling or moving | Less equity left for heirs when the loan settles |
| Works at any credit score — equity qualifies | Upfront costs are real — reviewed line by line before you commit |
| You keep title; heirs are protected by the non-recourse rule | Taxes, insurance, and residency obligations must stay current |
| Mandatory independent counseling before anything closes | Wrong tool for a short stay — if you’ll move within a few years, other options usually win |
If the right column worries you more than the left helps, a Home Equity Agreement (no monthly payments, no age requirement) or a HELOC may fit better — and we offer all three.
Myths vs. facts
- “The bank owns my home.” False. You stay on title; the lender holds a lien, exactly as with any mortgage.
- “My kids will inherit the debt.” False. HECMs are non-recourse: at settlement, nobody owes more than the home is worth.
- “I can be thrown out of my house.” The loan comes due only when you leave, sell, or stop meeting the obligations — taxes, insurance, residency.
- “It’s free money.” Also false. Interest accrues and the balance grows. It trades future equity for present cash flow — a good trade for some families, a bad one for others.
How to spot a reverse mortgage scam
Walk away from anyone who pressures you to sign quickly (a legitimate HECM can’t skip counseling, so urgency is always a tell); discourages you from involving family or attending counseling; arrives attached to something else — a contractor pushing a reverse mortgage to fund repairs, or an “advisor” steering proceeds into an investment they sell; charges upfront fees just for information; or quotes proceeds without knowing your age, home value, and balance. Bring us any offer you’ve received and we’ll review it honestly — including telling you when it’s a good one.
Seven questions to ask any reverse mortgage lender
Do I remain on title?
The only acceptable answer is yes.
What happens to my spouse if I pass first?
They should walk you through spouse protections carefully, not in one line.
What exactly must I keep paying?
Taxes, insurance, upkeep — stated plainly.
What do my heirs owe if the balance exceeds the home’s value?
Nothing — non-recourse. If they hedge, leave.
Can I see an estimate before committing to anything?
You should be able to.
Will you show me the alternatives?
A lender with one product will always recommend that product.
Who does my counseling?
An independent HUD-approved counselor of your choosing.
