Qualifying for a reverse mortgage involves more than just your home’s equity—it also includes a review of your credit history.  In 2025, lenders will focus on factors like payment history and satisfactory credit to determine eligibility.

In this guide, we’ll walk you through the credit qualifications for a reverse mortgage, highlighting the criteria underwriters evaluate during the loan approval process.  Whether you’re planning to apply or want to understand the requirements, this article will provide the insights you need to navigate the process confidently.

ARLO teaching credit requirements

How Will My Credit History Be Evaluated for a Reverse Mortgage?

Your lender will carefully review your credit history as part of the financial assessment process. A credit report will be required for all borrowers to document payment history and assess overall creditworthiness.

According to the Department of Housing and Urban Development (HUD) guidelines, having an imperfect credit history doesn’t automatically disqualify you from obtaining a reverse mortgage. Instead, lenders are required to take a deeper look at your accounts if your credit is deemed unsatisfactory.

This additional analysis focuses on understanding the reasons behind late payments or overdue accounts. Lenders will consider any extenuating circumstances—such as medical expenses, job loss, or other unforeseen financial hardships—that may have contributed to credit challenges.

By providing context for your credit history, you can work with your lender to demonstrate financial stability and meet the qualification criteria for a reverse mortgage.

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 that were more than 90 days late within the last 12 months and three or more revolving credit payments that were more than 60 days late within the previous 12 months.

Evaluating Payment History: Prioritizing Debts and Expenses

When assessing your creditworthiness, lenders follow a specific hierarchy to evaluate your payment history:

  1. Current or Previous Mortgage Debt and Housing-Related Expenses
    Your mortgage payment history is a primary focus, as it reflects your ability to manage housing-related obligations.
  2. Installment Debts
    Lenders will review payment histories for installment loans, such as auto loans or personal loans, to assess consistency.
  3. Revolving Accounts
    Credit card accounts and other revolving lines of credit are also examined to determine how well you manage ongoing financial obligations.

Credit Considerations for Reverse Mortgage Eligibility

Lenders will also evaluate additional credit issues that might appear on your credit report, even if they are more than two years old. These issues need to be addressed before proceeding with your reverse mortgage application.

Collections and Charge-Off Accounts

  • These accounts do not necessarily need to be paid off or placed under a payment plan.
  • However, lenders must determine why the accounts went into collection or were charged off.
  • Borrowers are required to provide a letter of explanation for each collection or charge-off account.

Judgments

  • Judgments must be resolved or paid off before or at closing.
  • Alternatively, the borrower must:
    • Enter into a valid agreement with the creditor to make regular payments.
    • Provide proof of timely payments for at least the last three months.

Delinquent Federal Non-Tax Debt

  • Borrowers with delinquent federal non-tax debt are ineligible unless the delinquency is resolved.
  • Lenders must verify the debt with a creditor agency.
  • If validated, the debt may be paid off at closing using reverse mortgage proceeds as a mandatory obligation.

Delinquent Federal Tax Debt

  • Borrowers with delinquent federal tax debt are ineligible for a reverse mortgage.
  • To qualify, borrowers must:
    • Pay off the debt before or at closing, or
    • Enter into a valid repayment agreement and provide proof of timely payments for at least three months.

Delinquent FHA-Insured Mortgages

  • Borrowers with delinquent FHA-insured mortgages are ineligible until the delinquency is resolved.
  • If reverse mortgage proceeds will be used to pay off the delinquent mortgage on the borrower’s primary residence at closing, the borrower becomes eligible.

Other Delinquent FHA-Insured Mortgages

  • Must be resolved before the reverse mortgage application can proceed.
  • These are not considered mandatory obligations and cannot be paid off using reverse mortgage proceeds at closing.

Final Thoughts

Understanding how lenders evaluate credit history and address potential issues is key to preparing for a reverse mortgage application. By proactively resolving credit concerns and providing necessary documentation, borrowers can navigate the process with confidence and unlock the benefits of a reverse mortgage.

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.

FAQs

Q.

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.
Q.

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.
Q.

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.
Q.

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.
Q.

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.
Q.

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.

2024-2025 HUD Credit Guidelines Update:

Medical collections and judgments are now excluded from expenses and no longer require a Letter of Explanation (LOE), irrespective of the amount or balance.

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