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My home is financed through a USDA loan. Can I get a reverse mortgage?
By Virginia F. on 12.29.2023Hello Virginia,
This isn’t a simple yes-or-no answer—it’s a possibility. The USDA loan program is designed for low-income borrowers in rural areas, some of whom may not meet HUD’s requirements for a reverse mortgage.
Income eligibility is straightforward. HUD uses a residual income approach, meaning we assess your income, subtract debts and property expenses, and if your remaining income meets the required threshold, you qualify. This process is free to check and often benefits borrowers with limited income—provided their debts aren’t too high.
Property eligibility is more complex. In some cases, we can estimate eligibility by reviewing public records and recent sales in the area. However, final approval depends on the appraisal report and the appraiser’s comments. Having a USDA loan (which must be paid off to obtain a reverse mortgage) doesn’t automatically disqualify you. However, since USDA loans typically apply to rural properties, it’s important to proceed cautiously before incurring appraisal costs.
HUD requires sufficient recent sales of comparable properties for eligibility. If your home is in a rural area, this can be a challenge. A lender can conduct a preliminary review of public records, but the only way to confirm whether your property meets HUD’s criteria is through an appraisal by an FHA-approved appraiser—after verifying that you meet all other qualification requirements.
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