A reverse mortgage allows homeowners 62+ to convert home equity into cash without selling the home or making monthly payments — the loan is repaid when you sell, move out, or pass away. It can be genuinely valuable for the right borrower, and genuinely harmful for the wrong one. This guide gives you the complete, honest picture: what a reverse mortgage actually costs, who it works for, and the situations where it makes no sense at all.
Minimum age to qualify for an HECM reverse mortgage — the federally insured standard product
No monthly mortgage payments required — the loan repays when you leave the home
HECM reverse mortgages are federally insured and regulated — the only type to consider
HUD-approved counseling REQUIRED before any reverse mortgage application — free
A reverse mortgage (specifically the federally insured HECM — Home Equity Conversion Mortgage) works as follows:
HUD requires HECM applicants to complete counseling with a HUD-approved independent counselor (free, not affiliated with any lender) before applying. This counselor is required to review alternatives to a reverse mortgage and discuss your specific financial situation. This is not a formality — it's one of the most valuable financial conversations available to seniors considering this product.
A reverse mortgage (HECM) allows homeowners 62+ to borrow against their home equity without making monthly payments. You receive funds as lump sum, monthly payments, or a line of credit. Interest accrues on the balance. The loan is repaid when you sell, permanently move out, or pass away. Your heirs can repay the loan to keep the home or allow the home to be sold to satisfy it.
High upfront costs (2%–5% of home value), interest compounds reducing equity over time, heirs inherit less, you must maintain taxes/insurance/upkeep or risk foreclosure, and the loan becomes due if you permanently move (including to assisted living). Not appropriate if you plan to move within 5–7 years or want to preserve the home for heirs.
The amount depends on your age (older = more), home value, current interest rates, and the HECM lending limit (currently $1,149,825). Typically 40%–60% of home value. Use HUD's HECM calculator at portal.hud.gov or work with an independent HECM counselor to get your specific estimate.
No — reverse mortgage proceeds are loan advances, not income. They are not subject to federal income tax. They also don't affect Social Security or Medicare benefits. Medicaid eligibility may be affected if proceeds are held as cash — spend or invest before the next month's Medicaid assessment.
When the last surviving borrower dies, the loan becomes due. Heirs have approximately 6 months (extendable to 12 months) to either repay the loan and keep the home, sell the home and use proceeds to repay the loan (keeping any remaining equity), or turn the home over to the lender (if loan balance exceeds home value — non-recourse means heirs owe nothing beyond the home itself).
A reverse mortgage is one of many options for seniors needing income or cash. Our guide covers every loan option for seniors on fixed income.
Senior Loans Guide →Senior borrowing options beyond reverse mortgage
Alternative to reverse mortgage
Home purchase guide
Calculate home loan costs
Estate and debt guide
Credit report guide
⚠ Disclaimer: Reverse mortgages are complex financial products. HUD-approved counseling is legally required before applying and is strongly recommended. This guide is educational only — not financial or legal advice. Consult an independent HECM counselor (free at 1-800-569-4287) before making any decision. See our Disclaimer and Privacy Policy.