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What Is a HECM?
A plain-English guide to the Home Equity Conversion Mortgage — the federally insured reverse mortgage available to qualifying homeowners age 62 and older.
Written by Mike Elachkar, President, Ennkar
If you have been researching ways to tap home equity in retirement, you have probably seen the term HECM. A HECM — short for Home Equity Conversion Mortgage — is the most widely used reverse mortgage in the United States. It is insured by the Federal Housing Administration (FHA) and regulated by the U.S. Department of Housing and Urban Development (HUD).
In everyday language, a HECM is a reverse mortgage. Instead of making monthly payments to a lender, a qualifying homeowner can receive funds from the lender based on a portion of their home equity. The loan balance grows over time as interest and fees accrue, and the loan becomes due when you sell the home, permanently move out, or pass away.
How a HECM Works
With a traditional “forward” mortgage, you borrow money and pay it back over time. With a HECM, the flow reverses: the lender disburses funds to you (or holds them in a line of credit you can draw from), and you are generally not required to make monthly mortgage payments.
You remain the owner of your home and keep the title. You are still responsible for property taxes, homeowner’s insurance, HOA fees if applicable, and maintaining the property. As long as you meet these obligations and live in the home as your primary residence, the loan stays in good standing.
The amount you may access — called the Principal Limit— depends on factors including the age of the youngest borrower, your home’s appraised value (up to the FHA lending limit), and current interest rates. Older borrowers and homes with more equity generally qualify for a higher principal limit.
Who Qualifies for a HECM?
Basic HECM eligibility requirements include:
- At least one borrower must be age 62 or older
- The home must be your primary residence
- You must have sufficient equity in the home
- The property must meet FHA property standards (single-family, FHA-approved condos, etc.)
- You must complete a HUD-approved counseling session before closing
- You must demonstrate ability to pay ongoing property charges (taxes, insurance, upkeep)
Credit and income requirements differ from a traditional mortgage. A financial assessment reviews whether you can meet ongoing obligations, but there is no minimum credit score published by HUD in the same way as conventional lending.
How You Can Receive HECM Funds
HECM borrowers can choose how to receive proceeds, subject to program rules:
- Line of credit — draw funds as needed; unused portions may grow over time
- Lump sum — available on fixed-rate HECM loans, subject to first-year draw limits
- Monthly payments — for a set term or for as long as you live in the home (tenure)
- Combination — mix line of credit with monthly payments or lump sum
The right structure depends on your goals — whether you need funds immediately, want a growing safety net for future expenses, or prefer steady monthly supplements. A licensed loan officer can walk through options using your specific numbers.
FHA Insurance and Non-Recourse Protection
What sets a HECM apart from many private loan products is FHA mortgage insurance. Borrowers pay an upfront Mortgage Insurance Premium (MIP) and ongoing MIP over the life of the loan. In return, the program provides important protections:
- Non-recourse loan — you or your heirs never owe more than the home's value when the loan is repaid (subject to program rules)
- Guaranteed access to funds — if your lender exits the market, FHA insurance helps ensure you can still access your line of credit
- Consumer safeguards — HUD sets requirements for counseling, disclosures, and loan terms
These protections are a major reason many homeowners choose a HECM over proprietary alternatives when their home value falls within FHA lending limits.
HECM vs. Other Reverse Mortgage Options
Not every reverse mortgage is a HECM. Jumbo (proprietary) reverse mortgages are private loan products designed for higher-value homes that exceed the FHA lending limit. They are not FHA-insured, may be available to borrowers as young as 55, and typically have different terms and disbursement options.
For most homeowners whose property value is within FHA limits, the HECM remains the standard choice because of its federal insurance, flexible disbursement options, and established consumer protections. Learn more on our HECM program page.
Frequently Asked Questions
What does HECM stand for?
Is a HECM the same as a reverse mortgage?
Do I need to own my home outright to get a HECM?
Is HUD counseling required for a HECM?
Can I lose my home with a HECM?
These answers are for educational purposes only and do not constitute financial, legal, or tax advice. This is not a commitment to lend. Ennkar, Inc. NMLS #976231. Licensed mortgage company in 16 states. Not all products available in all states. View licensing information · NMLS Consumer Access.
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This is not a commitment to lend. Ennkar, Inc. NMLS #976231. Licensed mortgage company in 16 states. Not all products available in all states. View licensing information · NMLS Consumer Access.