Reverse Mortgage Questions & Answers

It is a loan for homeowners 62 and older — some proprietary programs start at 55 — that lets you turn part of your home equity into cash without selling the home and without a required monthly mortgage payment.

Instead of you paying the lender every month, the money moves the other direction. You can take it as a lump sum, as monthly payments, as a line of credit you draw on when you need it, or as a mix. The balance grows over time and gets repaid when the last borrower sells the home, moves out permanently, or passes away.

You keep the title. You stay in your home. You are reaching equity you already built.

No. You keep full title and ownership. A reverse mortgage is a lien against the property, exactly like any other mortgage. It is not a sale of the home.

You stay the owner as long as you meet your loan obligations: living there as your primary residence, paying property taxes and homeowners insurance, paying HOA dues if you have them, and keeping the property maintained.

When the last borrower passes away, or moves out permanently, the loan becomes due. Your heirs have choices:

• Sell the home, repay the loan, and keep whatever equity is left.
• Refinance into a traditional mortgage and keep the home.
• Pay off the balance with other funds and keep the home.

There is a fourth option people rarely hear about. If the balance has grown past what the home is worth, your heirs can simply hand the title to the lender and walk away. They are not asked to cover the difference, and it does not reach the rest of your estate.

Because of non-recourse protection, your heirs will never owe more than the home is worth at repayment. See question 13.

As long as you meet your loan obligations, no. The loan becomes due and payable only when one of these happens:

• The last borrower moves out of the home permanently, or passes away
• Property taxes or homeowners insurance go unpaid
• The home is not kept up
• The borrower defaults on other terms of the loan

Stay current on taxes, insurance, and upkeep, and you can stay in the home.

Yes — and this is the part people miss. You must keep paying property taxes, homeowners insurance, and HOA dues if you have them, and you must keep the home in good condition. These are obligations of the loan, not suggestions. Falling behind on them can lead to default and foreclosure.

Some borrowers deliberately set aside part of the proceeds to cover these costs over time. That is worth talking through before you decide anything.

A reverse mortgage has no required monthly mortgage payment. That is the defining feature.

You do still pay property taxes, homeowners insurance, HOA dues if applicable, and maintenance. The loan balance grows over time and becomes due when you sell the home, move out permanently, or pass away. You are always free to make voluntary payments to slow that growth if you want to.

There is no honest one-size answer — it comes down to four things:

• Borrower age. Older borrowers can generally access more.
• Home value, confirmed by an appraisal. The federally insured program also caps the value it will count, and that cap is reset periodically.
• Interest rates at the time you lock. Lower rates generally allow more.
• What you still owe. Any existing mortgage is paid off first out of the proceeds.

For higher-value homes, proprietary programs can go beyond the federally insured cap. John will pull the current figures for your age and your home and walk you through them — anyone quoting you a number before that is guessing.

HECM (Home Equity Conversion Mortgage). The only reverse mortgage insured by the federal government through FHA/HUD. Open to homeowners 62+. It carries a cap on the home value it will count, and it requires HUD-approved counseling first.

Proprietary, sometimes called jumbo. Offered by private lenders rather than insured by FHA. Minimum age can start as low as 55 depending on the program and the state, and these can go beyond the federally insured cap, which matters for higher-value California homes. Terms, costs, and protections vary by program.

John is a broker, so he compares across a network of bank and lender partners rather than steering you into one company’s product.

Yes. There is a purchase version of the program: qualifying buyers 62 and older can buy a home and finance it with a reverse mortgage, with no required monthly mortgage payment. You bring a substantial down payment; the reverse mortgage covers the rest.

This is where John’s two licenses actually matter. He is a licensed Realtor and a mortgage broker, so the same person can list your current home, find the next one, run the comps, and do the loan. No handoff between an agent and a lender who have never spoken. It is a strong fit for anyone downsizing or right-sizing in retirement.

Reverse mortgage proceeds are generally treated as loan advances, not income, so they typically do not affect Social Security or Medicare.

They can affect needs-based assistance such as Medi-Cal or Supplemental Security Income, particularly if the money sits in your account past the month you receive it. If you receive needs-based benefits, talk to a benefits specialist or an elder-law attorney before you proceed. John is not a benefits advisor and will tell you the same thing.

The federally insured version is heavily regulated and carries real consumer protections:

• Non-recourse — you and your heirs can never owe more than the home is worth at repayment
• Mandatory independent counseling before you can even apply
• A three-business-day right to cancel after closing
• No repayment required while you live in the home and meet your obligations

Scams do exist around this product, and they usually share a shape: pressure, a deadline, a stranger who found you, or someone asking you to sign something you have not read. Work with a licensed, NMLS-registered professional you can look up — John is NMLS #280222, verifiable at nmlsconsumeraccess.org — complete the counseling, and never sign under pressure.

Before you can apply for the federally insured program, you must complete a session with an independent, HUD-approved housing counselor. It is a federal requirement, and it exists to protect you.

The session usually runs about 60 to 90 minutes, by phone or in person, and covers how the loan works, what it costs, what alternatives exist, and what you are obligated to do afterward. There is a counseling fee; the counselor will tell you the current amount up front, and in some cases it can be covered from loan proceeds. The counselor does not work for John or for any lender, so the guidance you get there is independent.

Federally insured reverse mortgages are non-recourse. When the loan is repaid, neither you nor your heirs will owe more than the home is worth at that time, even if the balance has grown past the value.

If the home sells for less than the balance, the FHA insurance that you pay for as part of the loan covers the shortfall. There is no personal liability and no claim against your other assets or your family’s. Your heirs can also deed the home back to the lender instead of selling it — either way, the shortfall is not theirs to pay.

Usually about 30 to 45 days from application to closing, depending mostly on the appraisal and how quickly paperwork comes back. The steps:

• First conversation and a look at your numbers
• HUD-approved counseling session
• Application and appraisal
• Underwriting and disclosures
• Closing and funding, followed by your three-business-day right to cancel

Costs generally include:

• The counseling fee — set by the counseling agency, disclosed to you up front
• An origination fee — capped by FHA on the federally insured program
• Mortgage insurance premium — required on the federally insured program; this is what funds the non-recourse protection
• Normal closing costs — appraisal, title, escrow, recording

Most of these can typically be financed into the loan, so you bring little or no cash to closing. You will get a full itemized breakdown in writing before you commit to anything — and you should read it. If anyone is vague with you about costs, that is your signal to slow down.

It becomes due and payable when any of the following happens:

• The last borrower sells the home
• The last borrower moves out permanently — for example, into a care facility for more than 12 consecutive months
• The last borrower passes away
• The borrower fails to meet loan obligations such as taxes, insurance, or maintenance

At that point you or your heirs repay it by selling the home, refinancing, or using other funds — and keep any remaining equity.

No — and this is the option almost nobody advertises. Most ways of reaching your equity require paying off and replacing your first mortgage. If you locked a 2% or 3% rate years ago, that is usually a bad trade.

A second-lien reverse mortgage sits behind your existing first mortgage instead of replacing it. Your current loan stays exactly as it is — same rate, same term, same payment — and the equity comes out on top of it as a lump sum, with no new monthly mortgage payment added. In California this one opens up at age 55 rather than 62, and it is non-recourse like the federally insured program.

Two things to know going in. Your existing first mortgage has to be a fully amortizing loan — an interest-only first will not work. And there is both a minimum and a maximum amount on this product; John will confirm the current figures when you talk. Program parameters change, so anything you read online about this (including here) is worth re-confirming on the call.

Full details on the keep-your-rate option →

Yes, though not the way a regular mortgage works. There is no monthly mortgage payment to qualify for, so nobody is checking whether your income covers a payment. What the lender does review is whether you can keep up the ongoing obligations — property taxes, homeowners insurance, HOA dues if you have them, and upkeep — plus your existing first mortgage payment if you are keeping one.

That review looks at credit history, your record of paying property charges, income, residual income, and assets. If it does not come back clean, that usually does not mean no. It often means the loan is set up with a portion of the proceeds set aside to pay your taxes and insurance for you going forward.

Be careful with anyone advertising a reverse mortgage as having no income or credit qualification at all. That is not accurate, and it is the kind of claim that should make you look harder at who you are talking to.