Understanding Reverse Mortgages

A reverse mortgage is a home loan designed for homeowners age 62 and older. It allows eligible homeowners to access a portion of their home equity while continuing to live in and own the home.

Unlike a traditional mortgage, a reverse mortgage does not require monthly mortgage payments. The loan is typically repaid when the borrower sells the home, moves out permanently, or passes away. As with any mortgage, borrowers must continue to meet their responsibilities, including paying property taxes, homeowners insurance, and maintaining the home.

For some homeowners, a reverse mortgage can help create more breathing room in retirement. It may be used to pay off an existing mortgage, supplement monthly income, create a line of credit for future needs, or help cover expenses that come with aging in place.

What is a HECM?

A Home Equity Conversion Mortgage, or HECM, is the most common type of reverse mortgage. It is insured by the Federal Housing Administration (FHA) and includes several borrower protections.

With a HECM, eligible homeowners may choose how they receive their loan proceeds, depending on what fits their situation. Options may include:

A lump sum
Monthly payments
A line of credit that can grow over time
Any combination of these options

Before moving forward with a HECM, borrowers are required to complete counseling with an independent HUD-approved counselor.

This step is designed to help homeowners understand the loan, the costs, the responsibilities, and possible alternatives before making a decision.

What is a Jumbo Reverse Mortgage and How is it Different from a HECM?

A jumbo reverse mortgage is a private reverse mortgage option typically designed for homeowners with higher-value homes that exceed FHA lending limits. Unlike a HECM, a jumbo reverse mortgage is not FHA-insured.

Jumbo reverse mortgages may provide access to more equity for qualified homeowners, but the terms, costs, protections, payout options, and age requirements can vary by lender and program.

Some common differences may include:

Higher Loan Amounts for eligible high-value properties
No FHA Mortgage Insurance Premiums – because the loan is privately
Expanded Age Flexibility – Some programs allow borrowers as young as 55
Simplified Payout Structure – Jumbos often offer lump-sum payouts, rather than multiple disbursement options.

Because these programs are not all the same, it is important to review the details carefully and compare them with a HECM before deciding which option, if any, makes sense.

Using a Reverse Mortgage to Buy Your Next Home (HECM for Purchase)

A HECM for Purchase is a type of reverse mortgage that allows eligible homeowners age 62 and older to buy a new home using a reverse mortgage instead of a traditional mortgage.

This can be a helpful option for people who want to downsize, move closer to family, relocate to a more manageable home, or find a property that better supports aging in place.

With a HECM for Purchase, you make a down payment using proceeds from the sale of your current home, savings, or other approved funds. The reverse mortgage covers the remaining portion of the purchase price.

For many older homeowners, this option may make it possible to purchase a home that better fits their lifestyle while preserving more of their savings for retirement.

Here's how it works:

You make a down payment (typically 45–65% depending on age and rates)
The reverse mortgage covers the remaining balance
No required monthly mortgage payments
You must live in the home as your primary residence and remain compliant with loan terms

Why homeowners consider this strategy:

Downsize or right-size into a more manageable home
Move closer to family or into a preferred location
Purchase a home that better fits aging-in-place needs
Preserve cash flow in retirement by eliminating monthly mortgage payments

This can be a powerful option if you're planning a move and want to maintain financial flexibility while still owning your home.

Who Qualifies for a Reverse Mortgage?

Basic qualifications depend on the program, but most HECM borrowers must:

Be at least 62 years old
Own the home outright or have enough equity to qualify
Live in the home as their primary residence
Be able to continue paying property taxes, homeowners insurance, HOA dues if applicable, and home maintenance
Complete required HUD-approved counseling for a HECM

Reverse mortgages are different from traditional mortgages, but lenders still review the borrower’s financial situation. This review helps determine whether the borrower is able to meet the ongoing obligations of the loan.

If you’re married, there are also protections in place for your spouse—even if they are younger—so they can continue living in the home.

Built-In Protections for Seniors With a Reverse Mortgage

Today’s reverse mortgages include important safeguards to help homeowners make informed decisions.

Required counseling for HECM borrowers through an independent HUD-approved counselor
Non-recourse protection, which means neither the borrower nor the heirs will owe more than the home is worth when the loan is repaid
The borrower keeps title to the home and remains the homeowner
No required monthly mortgage payments, as long as loan terms are met
Protections for eligible non-borrowing spouses under HECM rules

These safeguards are in place to provide peace of mind and help you make confident, informed decisions about your financial future.

Reverse mortgages are designed to give you additional financial resources—not take resources away. With the right guidance, this loan can be a powerful tool for a secure and comfortable retirement.

I'd be happy to speak with you and/or your loved one to see if a reverse mortgage might be a good option for you.

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