In short
A reverse mortgage, most often an FHA-insured HECM, lets homeowners 62 and older borrow against their home equity without a monthly mortgage payment. Borrowers keep the title, live in the home and pay taxes, insurance and upkeep. The balance grows over time and is repaid, usually through a sale, when the last borrower leaves the home.
Reviewed by Kelham and Dave Brown, NMLS #1824866 Kelham | 314516 Dave · Last updated October 19, 2026
How does a reverse mortgage work?
The most common reverse mortgage is the FHA-insured Home Equity Conversion Mortgage, or HECM. If you are 62 or older, live in the home as your primary residence and have enough equity, it lets you borrow against that equity without making monthly principal and interest payments. You keep the title and keep living in the home. You still pay property taxes, homeowners insurance and any HOA dues, and you keep the home in good repair. Interest and fees are added to the balance over time, so the loan grows and your equity shrinks. The loan becomes due when the last borrower sells, moves out permanently or passes away. Before you apply, you complete counseling with a HUD-approved counselor.
Key takeaways
A reverse mortgage can let homeowners 62 and older turn part of their home equity into cash without a monthly mortgage payment. It can also be misunderstood, oversold or written off too quickly. Our job is to walk you through how it really works, including the costs and tradeoffs, so you and your family can decide whether it belongs in your plan.
What a Reverse Mortgage Is (and Isn't)
With a traditional mortgage, you make a payment each month and your loan balance goes down. A reverse mortgage works the other way: you receive money based on your home equity, no monthly mortgage payment is required, and the balance grows over time as interest and fees are added. Most reverse mortgages today are Home Equity Conversion Mortgages (HECMs), which are insured by the Federal Housing Administration (FHA).
A reverse mortgage does not mean the bank owns your home. You keep the title, you keep living there, and you stay responsible for the house. It also is not free money. It is a loan, and it is repaid, usually when the home is sold.
Your Ongoing Responsibilities
Skipping the monthly mortgage payment does not mean skipping the costs of owning a home. To keep the loan in good standing, you need to:
- Live in the home as your primary residence
- Pay property taxes on time
- Keep homeowners insurance (and flood insurance, if required) in place
- Pay any HOA dues that apply
- Maintain the home in reasonable condition
Falling behind on these can cause the loan to become due. Before closing, the lender reviews whether these costs fit your income and resources, and in some cases sets aside part of the proceeds to cover them.
How You Can Receive the Money
Depending on the loan, proceeds can come as a lump sum, steady monthly payments, a line of credit you draw from as needed, or a combination. The amount available depends on factors like the age of the youngest borrower or eligible spouse, your home's value, the program's lending limits, current interest rates and any existing mortgage that has to be paid off first. Your rate depends on your scenario and the day's market. Reach out and we'll price it for real.
Required HUD-Approved Counseling
Before you can apply for a HECM, you meet with an independent counselor approved by the U.S. Department of Housing and Urban Development (HUD). The counselor explains how the loan works, what it costs, your obligations and the alternatives you might consider. We encourage you to bring your spouse, adult children or another trusted person to this session. It is a good place to ask hard questions.
The Real Costs and Tradeoffs
We want you to see the whole picture before you decide:
- Upfront costs can include an FHA mortgage insurance premium, an origination fee and typical closing costs. These are often financed into the loan, which reduces what you receive.
- Ongoing costs include annual mortgage insurance and interest, both added to your balance.
- A growing balance means less equity remains over time.
- Your estate will likely receive less from the home than it would without the loan.
- Benefits such as Medicaid or SSI can be affected by how you receive and hold the money. Talk with a benefits or tax professional about your situation.
For some homeowners, those tradeoffs are worth it. For others, a smaller home, a home equity loan or simply staying the course makes more sense. We'll help you compare.
When the Loan Comes Due, and What Heirs Can Do
The loan generally becomes due when the last borrower sells the home, moves out permanently (which can include a long-term stay in a care facility) or passes away. Eligible non-borrowing spouses may be able to stay in the home under certain conditions. Ask us how that applies to you.
When the loan comes due, heirs typically have a few options: sell the home and keep any remaining equity, pay off the loan and keep the home, or turn the home over to the lender. Because a HECM is a non-recourse loan, heirs generally will not owe more than the home is worth, even if the balance has grown larger than the home's value. Heirs do have deadlines to work with, so it helps when they know the plan ahead of time.
Buying or Refinancing With a Reverse Mortgage
A reverse mortgage is not only for staying put. If you are thinking about downsizing or moving closer to family, a Reverse Mortgage for Purchase can help you buy your next home. If you already have a mortgage, or an older reverse mortgage, take a look at Reverse Mortgage Refinance.
Let's Talk It Through Together
Homeownership is about more than a mortgage, and that's especially true at this stage of life. We'll sit down with you, face to face in Frisco, TX or virtually, explain your options in plain English and answer your family's questions. If a reverse mortgage isn't the right fit, we'll tell you.
Everything on this page is general education with illustrative examples only. It is not an offer to lend, a rate quote, or tax, legal or benefits advice. Reverse mortgage eligibility, costs, proceeds and guidelines vary by borrower, property and program and are subject to change. Contact our team for details specific to your situation.
Quick facts
- Most common type
- FHA-insured Home Equity Conversion Mortgage (HECM)
- Minimum age
- 62 (youngest borrower)
- Monthly mortgage payment
- Not required; taxes, insurance and upkeep still apply
- Counseling
- HUD-approved counseling required before applying
- When it comes due
- When the last borrower sells, moves out permanently or passes away
- Occupancy
- Primary residence
Is this loan right for you?
Who it's for
- Homeowners 62 and older who plan to stay in their home for the long term
- Owners with substantial equity who want more monthly breathing room in retirement
- Homeowners who want to pay off an existing mortgage and stop making monthly payments
- Retirees who want a line of credit as part of a broader retirement plan
- Families who want to plan together for how the home fits into the estate
Who it may not fit
- Homeowners under 62 (except as an eligible non-borrowing spouse in some cases)
- Owners who plan to move or sell within a few years, given the upfront costs
- Homeowners who would struggle to keep up with property taxes, insurance and maintenance
- Owners whose top priority is leaving the home free and clear to heirs
- Owners with little equity in their home
Pros and cons
Pros
- No monthly mortgage payment is required
- You keep the title and keep living in your home
- Flexible ways to receive funds: lump sum, monthly payments, line of credit or a combination
- Non-recourse protection: you and your heirs generally will not owe more than the home is worth
- Required counseling helps you and your family understand the loan before you commit
Trade-offs to weigh
- Upfront costs, including mortgage insurance and closing costs, can be significant
- The balance grows over time, reducing your equity
- Less home equity will likely pass to your heirs
- You must keep paying taxes, insurance and upkeep, or the loan can become due
- Proceeds can affect means-tested benefits like Medicaid or SSI
Frequently asked questions
Will I lose my home with a reverse mortgage?
You keep the title and can stay in the home as long as you live there as your primary residence and keep up with property taxes, insurance, HOA dues and maintenance. Falling behind on those obligations can cause the loan to become due, which is why we look closely at whether those costs fit your budget.
Do I have to make monthly payments?
No monthly mortgage payment is required. You can choose to make payments to slow the growth of the balance, but you do not have to. You are still responsible for the ongoing costs of owning the home.
What happens to my home when I pass away?
The loan becomes due. Your heirs can sell the home and keep any equity left after repaying the loan, pay off the loan and keep the home, or turn the home over to the lender. With a HECM, they generally will not owe more than the home is worth. We encourage you to talk with your family about the plan ahead of time.
Why is counseling required?
HUD requires counseling with an independent, HUD-approved counselor so you understand the costs, your responsibilities and the alternatives before you apply. It is a protection for you, and we encourage you to bring a family member or trusted advisor.
How much can I receive?
It depends on the age of the youngest borrower or eligible spouse, your home's value, program lending limits, current interest rates and any mortgage that needs to be paid off. We'll run your actual scenario instead of guessing.
What does a reverse mortgage cost?
Costs can include an upfront FHA mortgage insurance premium, an origination fee, closing costs, annual mortgage insurance and interest. Many of these are added to the loan balance. We'll show you each cost clearly so there are no surprises.
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Last updated October 19, 2026 · Reviewed by Kelham and Dave Brown, NMLS #1824866 Kelham | 314516 Dave. This page is educational and not a commitment to lend; program details change — ask for current figures.