An important part of qualifying for a reverse mortgage is evaluating a borrower’s credit history.  This article explains the credit qualifications necessary for a reverse mortgage in 2024, highlighting key factors such as payment history, satisfactory credit, and additional considerations that underwriters will evaluate in the loan approval process.

ARLO teaching credit requirements

How will my credit history be examined for a reverse mortgage?

Your lender will evaluate your credit history as part of the financial assessment and will require a credit report for all borrowers to document that history.  However, failure to prove satisfactory credit is not necessarily a reason to reject a borrower, according to the Department of Housing and Urban Development (HUD), which set the new rules.

Instead, it means that if your credit is not satisfactory, lenders must conduct further analysis of your accounts to determine the reason for things like late payments or overdue accounts (if they apply) and whether there are extenuating circumstances that may have caused them.

Satisfactory Credit Requirements for Reverse Mortgages

The lender may determine that the borrower has satisfactory credit if:

  • The borrower has made all housing and installment payments on time for the previous 12 months and has no more than two 30-day late housing or installment payments in the last 24 months.
  • The borrower has no “major derogatory credit” on revolving accounts in the previous 12 months.

HUD defines major derogatory credit as any revolving credit payments within the last 12 months being more than 90 days late and three or more revolving credit payments within the previous 12 months being more than 60 days late.

Evaluating Payment History: Prioritizing Debts and Expenses

In assessing your creditworthiness, lenders will evaluate payment histories in the following order:

  • Current or previous mortgage debt and housing-related expenses
  • Installment debts
  • Revolving accounts

Credit Considerations for Reverse Mortgage Eligibility

Lenders will also look into several other credit issues.  If these items appear on your credit report or other records, they must be addressed even if the issues are over two years old.

Among other things, these credit issues might include:

Collections and charge-off accounts

While these do not have to be paid off or placed under a payment plan, the lender must determine why these accounts were placed in collection or charged off.

Additionally, the borrower must provide a letter of explanation for each collection or charge-off account.


These must be resolved or paid off before or at closing.

If they are not paid off, the borrower must:

  • Have entered into a valid agreement with the creditor to make regular payments
  • Have made timely payments for the last three months

Delinquent federal non-tax debt

If it is determined that a borrower has delinquent federal non-tax debt, the lender must verify it with a creditor agency.

If the creditor agency verifies the debt is valid and delinquent, then the borrower is ineligible for a reverse mortgage until the delinquency is resolved.

However, this debt may be considered a mandatory obligation and may be paid off at closing using the reverse mortgage proceeds.

Delinquent federal tax debt

Borrowers with delinquent federal tax debt are ineligible for a reverse mortgage.

To become eligible, the borrower must either pay off the debt (before or at closing) or:

  • Have entered into a valid agreement to make regular payments and
  • Have made timely payments for at least three months

Delinquent Federal Housing Administration-insured mortgages

Borrowers with delinquent FHA-insured mortgages are ineligible for a reverse mortgage until the delinquency is resolved.

However, if the reverse mortgage proceeds will be used at closing to pay off the delinquent FHA-insured mortgage on the borrower’s principal residence, then the borrower is eligible.

Other delinquent FHA-insured mortgages

  • Must be resolved before the application can continue to be processed
  • Are not mandatory obligations and may not be brought current or paid off at HECM closing using the reverse mortgage proceeds

Reverse Mortgage Credit requirements Vs. Other Mortgage Types

Loan TypeReverse MortgageTraditional MortgageHELOC
Credit Score RequiredNo Min. Credit Score620+, higher for better rates620+, varies by lender
Credit HistoryReview of payment history on debts and taxes last 24 MonthsThorough credit history and score assessmentGood credit history with proof of timely payments
Income VerificationNo DTI requirementsRequired, proof of stable incomeRequired, along with home equity
Debt-to-Income RatioLess stringent than other loansTypically below 43%Varies, but generally below 50%
Other FactorsProperty charges must be current in last 24 monthsLoan-to-value ratio, property typeLoan-to-value ratio, may require an appraisal
This table summarizes the credit requirements for different types of loans, including Reverse Mortgages, Traditional Mortgages and HELOCs. It compares the credit score needed, credit history, income verification, debt-to-income ratio, and other factors that lenders might consider. Adjust the specifics as necessary to match the latest lending criteria or to include other loan types you may be interested in comparing.



What are the credit requirements for a reverse mortgage?

Reverse Mortgages require an overall sound credit history but no late payments in the past 24 months for property-related charges (taxes, insurance, mortgages, etc.) to both be approved for the loan and to avoid setting funds aside to pay taxes and insurance on the loan in the future.

Can you get a reverse mortgage if you have bad credit?

You can still get a reverse mortgage with bad credit, depending on the credit.  Most credit will ultimately warrant approval on a refinance (purchases are a little more strict), but if your credit has not been good in the past 24 months, you may be required to set funds aside out of the loan to pay taxes and insurance.  You can be declined for bad credit, but that is not common.

Can you get a reverse mortgage if you have filed for Bankruptcy?

You can get a reverse mortgage, even if you have filed for Bankruptcy in the past.  How long before you can do the loan depends on whether the loan is a purchase or a refinance transaction.

Does a reverse mortgage show up on a credit report?

There are no payments required on a reverse mortgage, so most lenders do not report to credit agencies.

Will a reverse mortgage impact your credit score?

While the reverse mortgage itself doesn’t directly alter your credit score, leveraging the funds to clear existing debts could positively enhance your credit profile, potentially boosting your credit score.

When does the lender pull a “hard inquiry” on your credit rating?

The reverse mortgage lender conducts a hard inquiry on an applicant’s credit as part of the application process, which is necessary for assessing eligibility and the potential need for a set-aside account under HUD’s Financial Assessment rules.  This credit check, implemented in 2015, helps determine the applicant’s financial standing early on, benefiting both the lender and borrower.  Delaying the credit check to avoid a hard inquiry might cause significant delays and necessitate redisclosure or adjustments to the loan terms based on credit information.

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