FAQs about HUD’s Reverse Mortgage

The Home Equity Conversion Mortgage (HECM) is FHA’s reverse mortgage program, which enables you to withdraw some of the equity in your home. The HECM is a safe plan that can give older Americans greater financial security. Many retirees use it to supplement Social Security, meet unexpected medical expenses, make home improvements and more.

You can receive additional free information about reverse mortgages in general by contacting Becky Koontz, Frost Mortgage’s Certified Reverse Mortgage Professional (CRMP) at
(800) 542-3211.

Becky loves to help her clients to make the most out of their retirement, click the button below to read some of their testimonials:

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A Reverse Mortgage is an excellent way for seniors to tap into the equity of their home, pay off an existing mortgage, or purchase a new home without house payments. This provides seniors with an opportunity to better enjoy their “Golden Years”. Reverse mortgages are government insured loans. The borrower retains ownership of their home. There are two types of reverse mortgages:

  • Reverse Purchase
  • Reverse Refinance

A Reverse Purchase enables a borrower to purchase a home with down payment and no future mortgage payments. This is a perfect way to downsize or purchase a newer, more efficient home. A Reverse Refinance allows a borrower to either pay off an existing mortgage, receive a monthly check, a line of credit, or a combination of all three.

To be eligible for a reverse mortgage:

  • All title holders must be age 62 or older.
  • The home must be the borrowers’ primary residence, and must meet Federal Housing Authority (FHA) minimum property standards.
  • The borrowers must have the financial resources to pay ongoing property charges including taxes and insurance
  • Borrowers must live in the home
  • Borrowers are also required to receive consumer information from a HECM counselor prior to obtaining the loan.
Yes. You may apply for a HECM regardless of whether or not you purchased your home with an FHA-insured mortgage.
To be eligible for the FHA HECM, your home must be a single family home or a 2-4 unit home with one unit occupied by the borrower. HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible.
With a second mortgage, or a home equity line of credit, borrowers must make monthly payments on the principal and interest. A reverse mortgage is different, because it pays you – there are no monthly principal and interest payments. With a reverse mortgage, you are required to pay real estate taxes, utilities, and hazard and flood insurance premiums.
When the home is sold or no longer used as a primary residence, the cash, interest, and other HECM finance charges must be repaid. All proceeds beyond the amount owed belong to your spouse or estate. This means any remaining equity can be transferred to heirs. No debt is passed along to the estate or heirs.
The amount varies by borrower and depends on:

  • Age of the youngest borrower or eligible non-borrowing spouse
  • Current interest rate; and
  • Lesser of appraised value or the HECM FHA mortgage limit of $625,500 or the sales price

If there is more than one borrower and no eligible non-borrowing spouse, the age of the youngest borrower is used to determine the amount you can borrow.

For adjustable interest rate mortgages, you can select one of the following payment plans:

  • 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 an amount of your choosing until the line of credit is exhausted.
  • Modified Tenure– combination of line of credit and scheduled monthly payments for as long as you remain in the home.
  • Modified Term– combination of line of credit plus monthly payments for a fixed period of months selected by the borrower. For fixed interest rate mortgages, you will receive the Single Disbursement Lump Sum payment plan.
  • Single Disbursement Lump Sum – a single lump sum disbursement at mortgage closing.