Quick answer
A reverse mortgage is a loan that lets homeowners 62 or older (55+ with some non-FHA programs, where state law allows) turn part of their home equity into cash without a required monthly mortgage payment. You keep the title and live in the home. Interest is added to the balance each month, and the loan is repaid when the last borrower sells, moves out for good or passes away, usually from the sale of the home. You still pay property taxes, homeowners insurance, HOA dues and upkeep. Most reverse mortgages are FHA-insured HECMs, which are non-recourse: you or your heirs never owe more than the home is worth.
Reverse mortgage meaning, in one sentence
With a regular mortgage, you pay the bank every month and your balance goes down. With a reverse mortgage, the lender pays you (or pays off your existing mortgage), you make no required monthly payment, and the balance goes up over time.
That's the whole idea. Everything else is detail about who qualifies, how much you can get and how it ends.
How it works, step by step
- You talk to a lender and get an estimate based on your age, your home's value and current rates.
- You complete HUD counseling. It's a required session with an independent counselor, usually by phone. What counseling covers.
- The home is appraised and the lender confirms you can keep up with taxes, insurance and upkeep.
- The loan closes. Any existing mortgage is paid off first. The rest is available to you.
- You choose how to receive the money: a lump sum, a line of credit, monthly payments, or a mix.
- You live in the home with no required mortgage payment. Interest and mortgage insurance are added to the balance.
- The loan ends when the last borrower sells, moves out permanently or passes away. The home is usually sold to repay it, and any equity left over goes to you or your heirs.
Want more detail on each step? See how a reverse mortgage works.
Who qualifies
- Age: 62 or older for an FHA HECM. Some non-FHA (proprietary) programs start at 55 where state law allows.
- Home: it must be your primary residence. Single-family homes, 2 to 4 unit homes you live in, FHA-approved condos and some manufactured homes qualify.
- Equity: you need substantial equity. Many borrowers have their home paid off or close to it.
- Ability to pay property charges: the lender reviews income and credit to make sure taxes and insurance will get paid.
- Counseling: required for every HECM borrower.
Full checklist: reverse mortgage requirements.
How much money can you get?
It depends on three things:
- Age of the youngest borrower. Older means more.
- Home value. For a HECM, value counts up to the FHA limit of $1,249,125 in 2026. Non-FHA jumbo programs can go higher.
- Interest rates. Lower rates mean more money available.
Example only, not an offer: a 72-year-old with a $700,000 home might qualify for very roughly 40% to 50% of the value with a HECM. If they still owe $120,000 on a mortgage, that gets paid off first, and the rest is available as cash or a line of credit. Your numbers will differ. Try the reverse mortgage calculator.
Ways to take the money
| Option | How it works | Good for |
|---|---|---|
| Line of credit | Draw what you need, when you need it. On a HECM, the unused part of the line grows over time. | A safety net in retirement |
| Monthly payments | A set amount each month for life (tenure) or for a set number of years (term) | Adding steady income |
| Lump sum | All at once at closing, usually with a fixed rate | Paying off a mortgage or a big one-time need |
| Combination | For example, pay off the mortgage and keep the rest as a line of credit | Most borrowers |
Why the growing line matters: how the HECM line of credit grows.
What it costs
Reverse mortgages cost more upfront than most home loans. On a HECM you'll typically see an origination fee (capped by FHA), an upfront FHA mortgage insurance premium of 2% of the home value, title and appraisal costs, and an annual mortgage insurance premium of 0.5% of the balance. Most costs can be paid from the loan instead of out of pocket. Full breakdown: reverse mortgage closing costs.
What you're still responsible for
This is the part people skip, and it matters. You must keep paying property taxes, homeowners insurance and any HOA dues, keep the home in reasonable repair, and live there as your main home. If those slip, the loan can become due and the home can be foreclosed on.
What happens to the home and your heirs
You keep the title the whole time. When the last borrower passes away, heirs can:
- Keep the home by paying off the loan, often with a regular mortgage. On a HECM, they can pay the lesser of the balance or 95% of the appraised value.
- Sell the home and keep whatever equity is left after the loan is paid.
- Hand it back to the lender if the home is worth less than the balance. Because a HECM is non-recourse, they don't owe the difference.
More on this: what happens to a reverse mortgage when you die.
Common myths
- "The bank owns your home." No. You stay on title.
- "You can owe more than the home is worth." Not on a HECM. It's non-recourse.
- "It cuts your Social Security or Medicare." No. Loan money isn't income, so those don't change. Need-based benefits like Medicaid and SSI can be affected if you hold onto the cash. Details here.
- "Your kids get nothing." Any equity left after the loan is repaid goes to them.
Is a reverse mortgage right for you?
It tends to fit when you plan to stay in your home for a long time, you want to lower your monthly bills or add income, and leaving the full home value to heirs isn't your top priority. It's usually a poor fit if you may move within a few years, can't keep up with taxes and insurance, or only need a small amount for a short time. A HELOC may cost less in that case. Weigh both sides: reverse mortgage pros and cons.
FAQ
What is a reverse mortgage in simple terms?
It's a loan for homeowners 62 and older (55+ with some non-FHA programs) that turns part of your home equity into cash with no required monthly mortgage payment. The balance grows over time and is repaid when you sell, move out for good or pass away.
What is the catch with a reverse mortgage?
The balance grows instead of shrinking, so less equity is left over later. Upfront costs are higher than most loans. You must keep paying property taxes, insurance, HOA dues and upkeep and live in the home, or the loan can become due.
Do you still own your home with a reverse mortgage?
Yes. You keep the title. The lender has a lien, just like with a regular mortgage.
Can you lose your home with a reverse mortgage?
Only if you stop meeting the loan terms, such as not paying property taxes or insurance, not keeping up the home, or no longer living there as your main home.
What happens when the reverse mortgage borrower dies?
The loan becomes due. Heirs can pay it off and keep the home, sell the home and keep any leftover equity, or hand the home back. With a HECM, they never owe more than the home is worth.
How old do you have to be for a reverse mortgage?
62 for an FHA HECM. Some non-FHA programs start at 55 where state law allows.
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