Reverse Mortgages

What is a reverse mortgage?

A reverse mortgage is a special type of home loan that allows a homeowner to convert a portion of the equity in his or her home into cash. Unlike a traditional mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. This loan is insured by FHA; however it does not require the first mortgage to be an FHA loan.

Can I qualify for a HUD Reverse Mortgage?

FHA requires that the borrower is 62 years of age or older and the house must be your primary residence.

What types of homes are eligible?

A single family dwelling or a two-to-four unit property that you own and occupy. Townhouses, detached homes, units in condominiums and some manufactured homes are eligible. Condominiums must be FHA-approved. It is possible for individual condominiums to qualify under the Spot Loan program.

What’s the difference between a reverse mortgage and a bank home equity loan?

You must have sufficient income versus debt ratio to qualify for the loan and you are required to make monthly payments. The reverse mortgage is different in that it pays you, and is available regardless of your current income. The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA's mortgage limits in your area, whichever is less. Like all homeowners, you are still required to pay your real estate taxes and other conventional payments like utilities, but with an FHA-insured HUD Reverse Mortgage, you home cannot be foreclosedor forced to vacate your house home because you missed a mortgage payment.

Can the lender take my home away if I outlive the loan?

If you sell your home or no longer use it for your primary residence, you or your estate will repay the cash you received from the reverse mortgage, plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or your heirs. None of your other assets will be affected by HUD’s reverse mortgage loan. This debt will never be passed along to the estate or heirs.

How much money can I get from my home?

The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home or FHA’s mortgage limits for your area, whichever is less.

How do I receive my payments?

You have five options:

  • Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
  • Term - equal monthly payments for a fixed period of months selected.
  • Line of Credit - unscheduled payments or in installments, at times and in amounts of borrower's choosing until the line of credit is exhausted.
  • Modified Tenure - combination of a line of credit with monthly payments for as long as the borrower remains in the home.
  • Modified Term - combination of a line of credit with monthly payments for a fixed period of months selected by the borrower.