The Wait is Over: ARLO’s Reverse Mortgage Starts at Age 55!

October 27, 2021

By Michael G. Branson Edited by Cliff Auerswald 10 comments

Reverse mortgage programs are now available starting at age 55

Proprietary or Private reverse mortgage programs were commonly referred to as “jumbo” reverse mortgages because that was just about the only time they were used by borrowers. The only time they seemed to make sense for a borrower was when the property was valued over the HUD maximum lending limit.

Even then, when they first reemerged after the mortgage meltdown, since the loan amount available as a percentage of the value of the home was so much lower than the HUD Home Equity Conversion Mortgage (HECM) program, it often made more sense to use the HUD program in many circumstances even when the home value was higher.

However, over the recent years, the loan amounts as a percentage of the value of the home have been rising, and the programs have been improving but we just received some really exciting news regarding these programs.

Many borrowers have been waiting for their 62^nd birthday for the HUD program to be able to take advantage of the reverse mortgage product, and were concerned about rising interest rates. Higher rates mean less money available to the borrowers and the ability to utilize the reverse mortgage program at an age less than 62 allows these borrowers to consider a reverse mortgage earlier.

But aside from just being able to get the loan at a younger age if needed, this brought additional benefits to borrowers.

ADDITIONAL BENEFITS OF PROPRIETARY REVERSE MORTGAGES

Not all condominium projects will qualify but different private programs have different approval criteria. Most have minimum loan amounts so it will not work for all condominiums but if your unit is valued at $450,000 or more and is not approved by HUD, you have another outlet you can potentially use.

They do still require an approval of their own because they are concerned about the property that secures their loan, but the process is different than HUD, and many HOA’s and condo boards seem to be less hesitant to participate in the approval process if they were concerned with a HUD approval in the first place.

You can use the loans for both refinances and for purchases. Now Borrowers age 55 and over can use a reverse mortgage to purchase a home in many cases, which can free up cash assets or eliminate the need for a monthly mortgage payment. You can still make a payment in any amount at any time if you wish, there is never a prepayment penalty.

You can also still use the program for homes valued HUD limits, and if the value is over $2,000,000, two appraisals are required. The good thing is, the investor of the program will pay for the second appraisal for you.

Because the loan programs are from a private investor and are not a HUD program, some of the programs will be slightly different and not all options will be available. For example, if you are looking for the payment for life (the HUD tenure option), the proprietary programs will not offer that.

CLOSING COSTS ARE MUCH LOWER ON PROPRIETARY REVERSE MORTGAGE LOANS

Mortgage insurance is not required so the loans are much less expensive to close, and you may be able to get lender credits to help pay for some or most of your closing costs depending on the loan.

It also depends on where the property is located and market conditions as to which costs the lender may be able to pay on your behalf, so be sure to check with your lender and shop around.

The rates on the proprietary loans are higher, but you have no mortgage insurance up-front cost or annual renewal so you need to keep that in mind when you do your comparison. HUD also has no program available below age 62.

The Chart below outlines the typical rates available at this time to determine the loan to value available by age:

Age 55-60 Reverse Mortgage Loan-to-values (LTV)

Borrower Age	Loan-to-Value	Loan-to-Value	Loan-to-Value
Rate	4.99%	5.875%	6.99%
Age 55	27.4%	36.4%	40.1%
Age 56	28.5%	37.6%	41.3%
Age 57	29.6%	38.6%	42.3%
Age 58	30.7%	39.8%	43.4%
Age 59	31.8%	40.8%	44.5%
Age 60	32.9%	42.0%	45.6%

LTV Tables as of: 10/26/2021
Available Payout: Lump Sum
*To calculate your loan amount divide your home value into the LTV percentage.
E.g., $500,000 value, age 55 = 41.3% LTV or $206,500 loan amount.

ARLO recommends the following resources:

Reverse Mortgage Age Requirements for 2023

America's #1 Rated Reverse Lender Celebrating 19 Years of Excellence.

TALK TO OUR HUMAN EXPERTS TOLL FREE: 800-565-1722

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10 Comments on this Article

Jo W.
June 21st, 2023

Hi Arlo, looking and hoping someone can help. I am 56- 57 September. You talked about a maximum of around $450,000. I have a balance of $500,000, but the house is worth around $950,000, and the interest rate is fixed at 3.875%. Thoughts?
Thank you!
Reply to Jo
- ARLO™
  June 23rd, 2023
  
  Hello Jo,
  At today's interest rates, with a value of $950,000 on the proprietary loans, you would receive less than $300,000 for a new reverse mortgage considering the age of 56, almost 57 years old. That would be over $200,000, short of the amount needed to pay off a loan of $500,000.
  The HUD HECM reverse mortgage allows borrowers to receive more money as a percentage of their home's value, but the minimum age for borrowers for this program is 62. If you were close to 62, I would suggest that perhaps you could look at other options to hold you over until your 62nd birthday, which might also give rates a chance to come down, possibly giving you access to more money (borrowers receive more money the lower the interest rates under the program down to the HUD floor of 3% where any further rate reduction does not result in added loan funds). But it's had to recommend that someone "hold on" for 5 more years, and it may not be practical in your case.
  The reverse mortgage may not be the answer you are looking for now, and you may need to consider other options. Remember that if you consider an alternative that requires you to borrow funds and make payments, it could be a while before a reverse mortgage is a viable option. If you decide to downsize, consider any potential properties now with an eye to the future to ensure they are eligible under the reverse mortgage program. That way, later, you might consider getting the loan to refinance when it is more advantageous.
  Reply to ARLO
Wayne R.
August 29th, 2022

My wife is 69 and I am 59. We live in CA but I work in TX. I am the only one on title. If I added her to Title and I was the non-borrowing spouse, could she qualify? Estimated value $240,000. Balance owed $127,000
Reply to Wayne
- ARLO™
  August 31st, 2022
  
  Hello Wayne,
  I'm a little concerned about occupancy when you say you "work in Texas". If you have a job that allows you to work remotely or travel but you reside in the CA home full time, you can add your spouse to title and that would allow you to be the eligible non-borrowing spouse in CA (if the property was located in Texas, you could not do this due to heirship laws).
  
  Whether or not you would qualify depends on a number of things including current interest rates. A quick visit to our calculator to see how your circumstances would turn out.
  Reply to ARLO
Anthony O.
June 28th, 2022

I'm 80 years old and my wife is 56 years old. I was wondering if she can get a reverse mortgage in her name since she is on the deed. She wants to live in the home for the rest her life after I pass away. We owe $283,000 on the loan and the homes are going for around $500,000 to $540,000 near us.
Reply to Anthony
- ARLO™
  July 6th, 2022
  
  Hello Anthony,
  
  She is not eligible for a loan in her own name alone but if you are applying as the borrower and she is an eligible non-borrowing spouse, you can get the loan and she can remain in the property as the eligible spouse for life under the terms of the loan even after you pass.
  The only downside you need to remember is that since you are the borrower and she is not, if there are still funds available in the line of credit after you pass, she would not have access to those funds. However, based on the numbers you shared with me, specifically her age and the value, that would probably not be an issue for you folks anyway.
  You would both be on title so there would be no issue with her keeping the home after you pass and as long as she continues to make the payments of the taxes and insurance on time (the same obligations you have as the borrower), she could continue to live in the home for life without having to make a mortgage payment.
  Reply to ARLO
Lynn
April 6th, 2022

I am 56 years old with 2 grown children and 1 teenager. My main income is survivors benefits with some side freelance work, but the SS runs out when my youngest turns 18. I have $200,000 left on my mortgage and my home is valued at $400,000. I pay 6.25 interest! I applied for a modification but the terms were terrible for very little monthly savings. Would a reverse mortgage work for me? My credit is not great.
Reply to Lynn
- ARLO™
  April 12th, 2022
  
  Hello Lynn,
  
  The HUD HECM program is the program that would be the best option for you but it is not available to you until you turn 62 years old. The private or proprietary programs will go down to lower values in some cases but the lowest we see is typically $450,000.
  However, we do not deal with all private programs and it never hurts to check with all lenders to see if their private programs that accept borrowers down to age 55 is the same.
  Typically, your credit does not have to be perfect, but it does need to meet certain criteria, especially your payments of the mortgage, taxes and insurance. But it never hurts to ask.
  Otherwise, you would need to wait until you were 62 and it sounds like your teen will turn 18 before that time and it makes sense to check with the proprietary programs.
  Reply to ARLO
Bill W.
January 29th, 2022

My wife is 51 and I am 61 turning age 62 in October. Both of us are on the title via our trust. Would we qualify for a Reverse Mortgage?
Reply to Bill
- ARLO™
  February 2nd, 2022
  
  Hi Bill,
  
  Your wife is not eligible for a reverse mortgage however, she could be an eligible non-borrowing spouse. She would not be on the loan but would have all the protections of a borrower and could remain in the home for life without having to repay the loan under the same terms as you as long as she also paid the property charges on time and lived in the home as her primary residence.
  The one big downside is that if you have a line of credit loan and you were to pass while there is a large balance remaining unborrowed, since she is not a borrower on the loan, she would not have access to those funds.
  She can always get a reverse mortgage in her own name later (as long as she and the property both qualify at the time she applies when she is 62 or older) and any money you did not use on the first loan was unborrowed so you do not accrue interest on it and those funds do not need to be repaid, but I always urge borrowers to consider if the loan would work for them still on the off chance that she cannot refinance and cannot access any additional funds. If not, it might not meet your needs and you should consider that in your decision-making process.
  Reply to ARLO

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In your current area 100 homeowners are currently utilizing reverse mortgages to better enhance their retirement years, with 500,000 nationwide!

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The minimum qualifying age for a reverse mortgage is 55

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The Wait is Over: ARLO’s Reverse Mortgage Starts at Age 55!

Reverse mortgage programs are now available starting at age 55

ADDITIONAL BENEFITS OF PROPRIETARY REVERSE MORTGAGES

CLOSING COSTS ARE MUCH LOWER ON PROPRIETARY REVERSE MORTGAGE LOANS

Age 55-60 Reverse Mortgage Loan-to-values (LTV)

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