Reverse Mortgage

A reverse home mortgage is another name for a reverse mortgage — a home loan that lets qualifying older homeowners convert part of their home equity into cash. The CFPB explains that, like a traditional mortgage, the title to your home remains in your name. Unlike a traditional mortgage, you do not make monthly mortgage payments. Interest and fees are added to the loan balance each month, so the balance grows. The loan is repaid when you no longer live in the home. You still pay property taxes and homeowners insurance, use the home as your principal residence, and keep the house in good condition. The CFPB calls a HECM the most common type.

A reverse mortgage is a home loan that lets qualifying older homeowners convert part of their home equity into cash without a required monthly mortgage payment, as long as they meet loan obligations such as living in the home as a primary residence and paying property taxes, insurance, and maintenance. The CFPB describes a HECM — the FHA-insured Home Equity Conversion Mortgage — as the most common type, available to homeowners age 62 and older.

Instead of you making monthly payments to the lender, the lender advances funds to you (or holds them in a line of credit). The CFPB states that interest and fees are added to the loan balance each month, so the amount you owe goes up over time and home equity decreases. You keep the title. The loan is repaid when you no longer live in the home — usually by selling it. Heirs on a HECM are generally protected by non-recourse rules so they are not personally liable beyond the home’s value at repayment.

The CFPB explains that a reverse mortgage is repaid when the borrower no longer lives in the home. The homeowners or their heirs eventually have to pay the loan back, usually by selling the home. It is not free money: borrowed money plus interest plus fees each month equals a rising loan balance.

For a HECM, at least one borrower is typically age 62 or older, the home must be a primary residence that meets property standards, you need enough equity after paying off existing liens, and you must complete HUD-approved counseling. Proprietary jumbo programs may allow younger borrowers (often 55+) with different rules. Final eligibility requires a full lender review.

Most large national banks no longer originate reverse mortgages. Today, specialty reverse-mortgage companies and FHA-approved lenders originate most HECMs. Ennkar is a licensed reverse mortgage lender (NMLS #976231). Compare licensing, counseling process, and Loan Estimates — see our compare hub for criteria.