Hi Doug,

This is a genuinely tricky situation, and I want to give you a straight answer.  The short answer is that you do not have to be a state resident to qualify for a reverse mortgage - but the way you have set things up creates a real problem that needs to be addressed before you apply.

The principal residence requirement

HUD requires that the property be your principal residence - defined as the place where you maintain your permanent place of abode and typically spend the majority of the calendar year.  The keyword there is permanent.  HUD is not just looking at how many months you spend somewhere.  They are looking at where you intend to live permanently.

The South Dakota residency is the issue.

You moved your legal state of domicile to South Dakota.  That is a direct contradiction of a claim that Arizona is your permanent home.  Underwriters look at driver's license, voter registration, tax filing status, and state of domicile when evaluating principal residence.  If South Dakota is your legal residence, establishing Arizona as your principal residence for HECM purposes is going to be an uphill battle regardless of how much time you spend there.

If you are serious about getting a reverse mortgage on the Arizona home, you likely need to reestablish Arizona as your legal domicile first.  That means updating your driver's license, voter registration, and tax filing status to reflect your return to Arizona.  Talk to an attorney about the full scope of what that involves given your situation.

A few other things to know once you do have the loan:

You are required to certify in writing each year that the property remains your principal residence.  You are also required to notify your servicer any time you are away from the property for more than two months.   For full-time RV travelers, that is not a small thing - you need to be diligent about it, or you risk the loan being called due and payable.

The good news is that your intention to spend the rest of your lives in that Arizona home works in your favor.  The documentation needs to match that intention.

Reference: HUD Handbook 4000.1, Section II.B.2.ii(A)(2) - Principal Residence Requirements (PDF pages 566-567).