Reverse mortgages can be a helpful financial tool for many seniors, but the requirements can sometimes be a bit confusing.  It’s 2024, and some things have changed.  Knowing the basics is important if you’re over 62 and thinking about a reverse mortgage.

That’s why we’ve compiled an easy-to-understand guide on the five basic rules for reverse mortgages this year.  We want to make sure you have all the information you need to make a choice that’s right for you.

To fully understand the ins and outs of the reverse mortgage, homeowners should remember and be aware of the following:

ARLO teaching the 4 Rules for Getting a Reverse Mortgage

1.  There’s a Lending Limit for HECM Loans

As great as it would be to borrow an unlimited sum of money, the reality is that homeowners can only borrow according to the Department of Housing and Urban Development limits.

As determined by the Federal Housing Administration, the Home Equity Conversion Mortgage reverse mortgage limit is currently $1,149,825.  However, not everyone will be able to receive the maximum amount.

Factors that determine how much money someone can borrow through a HECM reverse mortgage include:

  • Age of the youngest borrower (or eligible non-borrowing spouse)
  • The appraised value of the home (up to $1,149,825)
  • Current interest rates

2.  Reverse Mortgage Counseling is a Must

Reverse mortgage benefits can help immensely with retirement planning, but borrowers must first go through counseling.

During these sessions, homeowners will meet with an unbiased reverse mortgage counselor, who can ask questions about the HECM loan terms, process, and more.

During the required counseling, homeowners will learn that taking out a HECM loan doesn’t exclude them from the following applicable homeowner obligations for the life of the loan, depending on the property type:

  • Property taxes
  • Homeowners Association Fees
  • Homeowner’s Insurance

Additionally, borrowers will find out to borrow a HECM loan; they can’t be delinquent on any federal debt.

Examples of federal debt are:

  • Student loans
  • Direct loans
  • HUD-insured loans
  • Small Business Administration loans

Once the counseling mandate is completed, homeowners will receive a certificate in the loan application.

3.  Only Certain Property Types Qualify

For homeowners to take out a reverse mortgage, they must meet a handful of requirements pertaining to the home.

Homeowners need to own their home outright or have a low enough mortgage balance that it can be paid off with the reverse mortgage.  A borrower must maintain the home as their primary residence.

Switching gears to home qualifications, the following rules are in place regarding homes and how they’re built:

  • A home must be classified as single-family (if the property is multi-family, one unit must be occupied by the senior homeowner)
  • Vacation homes and second homes don’t qualify for reverse mortgages
  • Manufactured homes and condominiums may be eligible for a reverse mortgage

Understanding the above property requirements helps senior homeowners better position themselves to successfully apply for a reverse mortgage.

4.  Non-Borrowing Spouse Protections May Apply

non-borrowing spouse (NBS) is not named on the home title a spouse, and they can be any age.  Thus, they don’t qualify as a legal borrower on an HECM reverse mortgage.  But in 2014, HUD introduced new guidelines to protect non-borrowing spouses better.

A surviving non-borrowing spouse can remain in the home after the borrower has passed away if the non-borrowing spouse meets specific requirements.  It’s important to talk with your lender and reverse mortgage counselor if you plan to take a reverse mortgage and your spouse is not on the home title.

Senior homeowners taking out a reverse mortgage loan will want to ensure their spouse is included in the transaction and is a party to the reverse mortgage contract.  This will help protect a spouse if the fully qualifying spouse passes away.

5.  Homeowners Can Choose Among Several Payment Options

When taking out an adjustable interest rate reverse mortgage, homeowners will need to choose from five payment options:

  • Line of credit (installments or unscheduled payments delivered at homeowner’s choosing)
  • Modified tenure (combination of line of credit and scheduled monthly payments)
  • Modified Term (combination of line of credit and scheduled monthly payments for a fixed number of months)
  • Tenure (monthly payments delivered if one borrower maintains a residence in primary property)
  • Term (monthly payments for a set number of months)

When taking out a fixed-interest rate loan, homeowners receive payouts in one lump sum.  Line of credit and tenure are popular options among homeowners, but the payment option is ultimately up to each homeowner.

Senior homeowners looking to supplement retirement spending should consider applying for a reverse mortgage.

WARNING: Breaking these 3 Rules Have Serious Consequences

There are a few specifications the borrower must maintain on an ongoing basis to keep the reverse mortgage loan in good standing.

They are straightforward but essential.

1.  Occupancy

The borrower must occupy the home as their primary residence.  Once the borrower moves or leaves home “permanently” or for over a year, the loan becomes due and payable.  The loan must be repaid if the borrower moves to an assisted living facility or nursing home.

2.  Tax and insurance

Under the reverse mortgage terms, the borrower must pay annual property tax and maintain a homeowner’s insurance policy.  These requirements accompany almost all home loans, so anyone who has held a forward mortgage will be accustomed to these ongoing property charges.  Failure to pay property tax or maintain homeowner’s insurance will make the loan due and payable.

3.  Maintaining the home

The final requirement of an FHA-insured reverse mortgage is maintaining the home’s condition.  The home must remain in good repair throughout the loan, as determined by the loan servicer.  Upkeep the house, paying property tax and insurance, and remaining in the home will ensure the borrower is in good standing on the reverse mortgage and can age in place if they choose.

Essential Guidelines for Reverse Mortgage Eligibility and Requirements

Borrower Age RequirementBorrowers must be at least 62 years old.
Primary ResidenceThe property must be the borrower's primary residence.
Equity RequirementBorrowers must have substantial equity in their home (typically at least 50%).
Financial AssessmentLenders conduct a financial assessment to ensure the borrower can afford taxes, insurance, and home maintenance.
Loan RepaymentThe loan becomes due when the borrower sells the home, moves out, or passes away.
Counseling RequirementBorrowers must undergo counseling from a HUD-approved agency.
Property EligibilityEligible properties include single-family homes, FHA-approved condominiums, and certain manufactured homes.
This table provides a concise overview of the primary rules associated with reverse mortgages, including borrower age, primary residence requirements, equity requirements, financial assessments, loan repayment terms, counseling requirements, and property eligibility.

Top FAQs


What are the basic rules of a reverse mortgage?

To obtain a reverse mortgage, you must meet the minimum age requirement, which in most cases is 62.  Some private reverse mortgage programs allow for borrowers as young as 55 in some but not all states.   The property must be the primary residence of the borrower(s) and remain the primary residence of at least one borrower for the duration of the loan to remain in good standing.  Additionally, the borrower(s) are responsible for paying their property taxes, homeowners insurance, and upkeep of the property as they would be for all other loan types.

What happens when someone dies with a reverse mortgage?

When the last original borrower or eligible non-borrowing spouse permanently leaves home due to incapacity or death (or any other reason), the loan becomes due and payable.  Borrowers or their heirs then have the right to repay the loan with funds available to them, or by refinancing the loan, they can sell the property and repay the loan with the sale proceeds, or they can walk away and owe nothing.  If the borrower(s) die and heirs wish to keep the home, but the mortgage balance is greater than the value of the home, the heirs can repay the loan in full for an amount equal to the amount owed or 95% of the current value of the home, whichever is less.

What are some specific requirements for reverse mortgages in California?

California is one of the few states that imposes an additional time on the front end like the right of rescission that borrowers have on the back meant to give borrowers a “cooling off” period after counseling.  Lenders cannot begin processing a loan for a borrower for at least 7 days after borrowers have completed their counseling.  Regardless of whether HUD will allow a returning borrower to waive counseling within 5 years, the state of California will not, and all borrowers must attend counseling for each new loan.  Spouses and non-borrowing spouses must attend counseling.  In the state of California, the water heater must be double strapped.

What are some specific requirements for reverse mortgages in Texas?

In Texas, you cannot do a loan for a non-borrowing spouse, whether eligible or non-eligible.  The reverse mortgage loan must close within 180 days of counseling, or the borrower(s) must be re-counseled.  The Preliminary Title Report is valid for 90 days per Texas state law.  The lender must order a new, updated report if the loan does not close within that period.  Texas loans cannot close with a Life Estate interest in the property.  The loans in Texas also cannot close in the name of a trust.  Transactions must use an attorney to review the title and closing package, which is in the state of Texas.

What are some specific requirements for reverse mortgages in Florida?

Florida requires the charges of transactions that can add considerably to the loan costs in that state.  The state of Florida requires that each loan gets a copy of the survey or a signed survey affidavit.   Florida charges additional taxes such as Intangible Taxes and Documentary Stamp Taxes.  Although these are not lender fees, they are moving costs and getting new loans in Florida and must be considered.