When it comes to reverse mortgages, you can only have one active reverse mortgage at a time. The amount you can access is determined by factors such as your age, home value, interest rates, and any required set-asides.

Can You Refinance a Reverse Mortgage?

While you cannot take out a second reverse mortgage, you may be able to refinance your existing reverse mortgage after 12 months. However, this is only recommended if the new loan offers substantial benefits.

Many borrowers find that their home’s value hasn’t increased enough to make refinancing worthwhile. Additionally, removing set-aside funds alone does not qualify as a significant benefit under HUD’s refinance guidelines.

HUD’s ‘5-Times’ Benefit Rule for Refinancing

For a HECM-to-HECM refinance (refinancing one reverse mortgage into another) to be approved, HUD requires that the new loan provides at least five times the cost of the loan in unique benefits.

For example:

• If the new loan incurs $4,000 in costs, you must receive at least $20,000 in additional benefits beyond what you already had available.
• Simply eliminating a set-aside does not count as a unique benefit.

Are There Exceptions?

There are limited exceptions to this rule, but lenders are cautious about pursuing them unless the new loan offers clear advantages to the borrower. If HUD determines that the lender did not follow the guidelines, they may refuse to insure the loan.

Bottom Line

• You cannot take out a second reverse mortgage, but refinancing is an option if it provides substantial financial benefits.
• HUD’s 5-Times Benefit Rule ensures that borrowers only refinance when it’s genuinely beneficial.
• Carefully evaluate whether a new reverse mortgage makes sense for your situation.

Related: HECM-to-HECM Refinance ‘5-Times’ Benefit Rule Explained