Reverse Mortgage Options for Veterans in 2024

February 25, 2024

Question from our reader:

“We have a reverse mortgage, but we were never told there was a reverse mortgage for veterans. We have quite a bit of equity in our home. Can we refinance our current reverse mortgage to a VA reverse mortgage?”

Table of Contents

• Understanding FHA and VA Loan Mechanisms

• The Elusive “Veterans’ Reverse Mortgage”

• What the CFPB Says

• Veteran Mortgage vs. HECM Reverse Mortgage: A Detailed Feature Comparison

• FAQs

Understanding FHA and VA Loan Mechanisms

FHA and VA’s Indirect Role in Loans: It’s important to clarify that neither the Federal Housing Administration (FHA) nor the Department of Veterans Affairs (VA) directly provides loans to consumers. While the FHA, operating under the Department of Housing and Urban Development (HUD) umbrella, insures loans, the VA offers guarantees for a portion of loans. However, the actual loan provision is the responsibility of private lenders, who then secure insurance and guarantees through these government entities.

The Elusive “Veterans’ Reverse Mortgage”

The Persistent Myth: Every few years, the concept of a “reverse mortgage for veterans” resurfaces in finance. Despite numerous articles and the usage of various terminologies such as “Veteran’s Reverse Mortgage” or “Kosher VA Reverse Mortgage,” there still appears to be no concrete program that fits this description. Specifically, a reverse mortgage loan tailored for veterans, adhering to distinct guidelines and backed by the VA, remains unseen.

Personal Research and Findings: In my continuous effort to stay informed, I recently revisited this topic, spurred by repeated queries and a personal commitment to lifelong learning (a fact my wife can attest to). My investigation led me first to the U.S. Department of Veterans Affairs website, where they detail various lending programs available to U.S. veterans.

Available Programs and Warnings: The site offers information on various programs, including Purchase and Cash-out Refinance Loans, Interest Rate Reduction Refinance Loans (IRRRL), and even Native American Direct Loans. However, conspicuously absent is any mention of VA-guaranteed Reverse Mortgages. Intriguingly, a search for reverse mortgages redirects to a cautionary notice from the Consumer Finance Protection Bureau, in partnership with the VA. This 2012 notice sternly warns against false advertising, particularly the crime of misleading veterans and older Americans with non-existent programs, with specific reference to reverse mortgages.

Staying Updated with Industry News: As a National Reverse Mortgage Lenders Association member, I am privy to regular updates on new and emerging programs. If there had been any recent developments regarding a VA-backed reverse mortgage, it’s likely that this information would have reached our association. Despite not being a VA-approved lender, I was confident in my knowledge of the industry’s latest offerings.

Common Misunderstandings Among Borrowers: It seems you’ve encountered what many borrowers have – notifications or advertisements using terms like “VA Reverse Mortgage.” However, it’s crucial to note that these often refer to the HECM program – Home Equity Conversion Mortgage – which is a HUD or FHA initiative, not a VA-backed program.

What the CFPB Says

Finally, I checked the Consumer Financial Protection Bureau’s website and found the answer I sought.

This was on the official government consumer protection site regarding this exact issue:

https://www.consumerfinance.gov/ask-cfpb/i-saw-an-ad-for-a-no-payment-reverse-mortgage-from-the-department-of-veterans-affairs-va-is-this-legitimate-en-1719/:

So, there you have it.

I am sorry to say that the VA does not offer the program you seek, so the answer to your question is no, you would not be able to refinance your current reverse mortgage with a “VA reverse mortgage.” Furthermore, if you get an ad from someone saying they have such a program, I suggest you immediately toss it in the trash because that’s where it belongs!

Veteran Mortgage vs. HECM Reverse Mortgage: A Detailed Feature Comparison

Compare Features	Veteran Mortgage (VA)	HECM Reverse Mortgage
Borrower Minimum Age	18	62
Lending Limit	$766,550	$1,149,825
Income Requirements	Full Documentation	Limited
Credit Score	660	No Minimum
Reserves	2-6 Months PITI	No Minimum
Average Fixed Rate	5.625% (6.08% APR)	6.680% (8.094% APR)
Loan Duration	15-Year, 30-Year	For Life
$0 Monthly Payment Option	No	Yes
Low/No Closing Costs	Yes	No
Monthly Mortgage Insurance	None	.50% Monthly

VA Fixed Rate source: https://www.veteransunited.com/va-loans/va-mortgage-rates/#loan-type. 5.625% (6.08%% APR) and 1.75% discount points on a 60-day lock period for a 30-Year VA Cash-Out

FAQs

Does the VA offer reverse mortgages?

Currently (as of January 2024), the VA does not offer reverse mortgage loans.

Can you refinance a VA loan to a reverse mortgage?

Yes. A reverse mortgage loan can be used to pay off any existing mortgage on the property if there are enough funds to do so.

Can I sell my house if I have a reverse mortgage?

Yes. A reverse mortgage loan has no prepayment penalty, so you can sell your home anytime and pay off the reverse mortgage.

Would a military retired and disabled veteran be better off getting a VA guarantee equity home loan than a reverse mortgage?

Ultimately, the answer depends on you. Which option aligns best with your needs and goals? If you’re interested in a loan and are comfortable with making payments, or if leaving a substantial asset to an heir is your priority and eliminating monthly payments isn’t a goal, a home equity loan might be your better choice. It’s less costly in the short term and provides immediate cash. This option is worth considering if the repayment terms fit within your budget. On the other hand, if you’re less concerned about leaving a mortgage-free home to your heirs—perhaps because they are financially independent or you have no heirs—and you’re looking for a way to access cash without the burden of monthly mortgage payments, thereby living more comfortably, a reverse mortgage could be the ideal solution. This option is particularly appealing if you have an inconsistent income and anticipate a decrease in income or if managing another payment isn’t feasible. Gather information for both scenarios, then decide which suits you and your family best. Remember, with a reverse mortgage, while there’s no obligation to make payments, you have the flexibility to make payments of any amount, even paying off the loan in full without penalty at any point. Unused lines of credit will grow over time, increasing your available amount. Interest is only accrued on the funds you use, not on the unused credit line or its growth.

Can a reverse mortgage impact my ability to secure a VA loan?

Yes and No. Having a reverse mortgage that you paid off in full would not impact your ability to apply for a VA loan later as a reverse mortgage is not a VA program and, therefore, does not use your VA benefits. However, if you default on one government program and then apply for another, you may not be able to qualify due to credit requirements. Additionally, a reverse mortgage and VA loans require the property to be your primary residence, so you could not have both simultaneously.

Can I use my GI bill (VA benefits) on a reverse mortgage?

The HUD/FHA-insured reverse mortgage loan is an FHA program, not a VA-guaranteed loan. At this time, I am unaware of any VA reverse mortgage programs or plans in the works to begin one. Therefore, unfortunately, your GI benefits cannot be used for this program.

Can I use my VA loan to repay my parent’s reverse mortgage?

While I can’t specify the loans you’re eligible for, if you are eligible and qualify for a VA loan as a refinance option for the property once the title is in your name, I see no reason why not. The reverse mortgage becomes due and payable, and there are no stipulations from the reverse mortgage regarding the source of your financing. Therefore, it’s a matter of meeting your VA lender’s requirements for the new loan.

Can I use a reverse mortgage to payoff my VA loan?

You can pay off a VA loan with a reverse mortgage. The issue that usually makes this a bit tougher is that VA loans typically start at a higher loan-to-value, so it depends on whether your equity position in the property is high enough to qualify under the reverse mortgage terms. But if so, there is no problem paying off a VA, FHA, or conventional loan with a reverse mortgage if the numbers work.

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17 Comments on this Article

William S.
June 9th, 2023

I have a reverse mortgage for 10 yrs. My septic system is just about had it. I'm 74, live alone, and am a Vietnam veteran on a fixed income. How can I get help from the reverse mortgage company for the new system?
Reply to William
- Michael Branson
  June 9th, 2023
  
  Hi William,
  You can certainly contact your current lender to see if your property value is such that you can refinance your current loan to obtain more money. Many properties have appreciated substantially over the past 10 years. You may be able to refinance the current loan to receive additional funds. If not, you may need to look at other options. HUD usually has available listings of assistance; you should check their website at HUD.gov to see what is available in your area.
  Reply to Michael
Brenda
April 30th, 2022

Great information! Our veteran father passed in 2018. Our mother (88) is living in her home and bedbound. We are considering a reverse mortgage to help pay for homecare and medical bills but wonder if it would be better to seek out a VA refi. based on how expensive reverse mortgages are and the short time we may need it. Another option is to refi her current mortgage to pull out cash but wondering if she can she get a VA loan as the spouse of a veteran? Just researching all options. Thank you!
Reply to Brenda
- Michael Branson
  May 10th, 2022
  
  Hello Brenda,
  
  We do no VA financing so I am not the one to comment on those loans.
  However, since they do require monthly payments, you would need to determine if mom's income is sufficient for the required monthly payments. If it is, then compare the two programs and benefits and go with the one that best meets her needs.
  With the reverse mortgage, you could see what she would be eligible for with the Tenure payment and then she would receive the payment for life so no matter what the requirement was, she would be covered.
  Whichever way you choose to go, it's all about your mom and we wish you the best!
  Reply to Michael
Tony
March 19th, 2022

I'm age 60, as of Dec 2021, and 100% service-connected disabled vet. My wife & I have a 2.25% fixed 30 yr VA loan on a single-family residence in Los Angeles.
My mother just passed away at 93. I'm her sole beneficiary. She's had a reverse on her single-family residence for over 7 yrs. The payoff is $491k with a principal limit of $686k. Appraised market value is +/-$1.5M. I want to keep the property; however, not sure if I'll get approved on a conventional.
Question: Although I'm under 62, are there any provisions for a 100% disabled vet to be eligible for a reverse, or can I assume mom's existing reverse?
Reply to Tony
- Michael Branson
  March 22nd, 2022
  
  Hi Tony,
  You cannot get a HUD HECM at age 60 and I am not aware of any programs for disabled veterans but that doesn't mean you are out of luck either!
  The jumbo private programs do have options that go to lower ages and at age 60, I think one might work well for you. The only caveat that I can see that you need to be aware of is that this must be your principal residence to qualify for a reverse mortgage of your own on that property.
  If you move into the home and are on title, you can probably apply for a jumbo reverse mortgage on that property at 60 years of age.
  I recommend that you talk to a lender first though and discuss your qualifications before you make any changes to be sure you will qualify with your current home as well.
  Reply to Michael
Mary
March 9th, 2022

DO YOU HAVE ANY SPECIAL HELP FOR VETERANS REVERSE MORTGAGES?
Reply to Mary
- Michael Branson
  March 9th, 2022
  
  Hello Mary,
  I am not aware of any reverse mortgage programs specifically for veterans.
  I believe there are higher lending limits for Veterans with regard to the loan to value allowed on forward loans but that would be contrary to the idea of a low loan to value and then no payments as are the case with reverse mortgages.
  Veterans are certainly eligible for the FHA reverse mortgages as well though.
  Reply to Michael
Debbie
July 23rd, 2021

I am basic borrower on Reverse mortgage on our home, my husband is second owner.
He is a Disabled veteran, is he eligible for a VA Home Loan although this home is $68k in Reverse mortgage but is valued at $160? Is my husband a Veteran eligible for VA Loan?
He is 72. Thanks ARLO!
Reply to Debbie
- Michael Branson
  July 25th, 2021
  
  Hello Debbie,
  
  To my knowledge, there is still no VA reverse mortgage program available and so you would be looking at refinancing your FHA reverse mortgage with a new VA loan that does require monthly payments. We do not offer VA loans and I honestly could not advise you on their requirements or the amounts available under the VA programs.
  I would need to direct you to one of the lenders who originate VA loans to answer your question, but I honestly do not believe it matters who is listed first on title. I would contact one of the VA lending specialists listed online after checking on their borrower ratings.
  Reply to Michael
Glenda I.
October 12th, 2019

How much money will you lose if you do a reverse mortgage for cash out of $480,000, then you end up selling it in less than 1 year. How much money does it cost in fees to get the loan and then all the fees that accrue for first year? When do you have to start paying the loan back? Are there any discounts for a 93 disabled navy vet of world war ll.?
Reply to Glenda
- Michael Branson
  October 12th, 2019
  
  Hello Glenda,
  
  The reverse mortgage is not a good option for a 1-year loan and I would not recommend it as such. There are other less expensive loans if you think you will only need the loan for a period of 12 months such as a Home Equity Line of Credit.
  You pay the loan back after you no longer live in the property but all the fees including the HUD mortgage insurance are "front loaded" meaning you pay them at the start by adding them to the loan balance and if you are only planning on keeping the loan for a year, it is a very expensive loan for such a short time.
  There are no VA benefit reductions in the costs as it is an FHA loan and not a VA loan and I am not aware of a VA reverse mortgage option.
  Reply to Michael
Mary
August 19th, 2019

My spouse is a disabled veteran who is just recovering from a Kidney transplant. He is an amputee and blind in one eye and has limited vision in the other eye. He is still very weak, and he must use a wheelchair to move around. Can we ask for over the phone counseling (maybe thru SCIPE?) due to his current medical hardship?
Reply to Mary
Joe Stegina
November 30th, 2018

great artical. am vet and we are considering a rev mortg. like where we live but soon will not be able to afford.
Reply to Joe
- Michael Branson
  November 30th, 2018
  
  Thank you for the compliment Joe and thank you for your service! I wish you
  the best now, and in the future. If we can be of any help, please don't hesitate to call upon us.
  Reply to Michael
Mark Alan Brown
November 5th, 2018

We have a paid -off home, but need to repair and update the home. Could a home-equity second mortgage be converted to a VA guaranteed loan?
Reply to Mark
- Michael Branson
  November 5th, 2018
  
  Hello Mark,
  
  You would have to contact a VA loan company to request information about different VA options, but generally speaking, most loans cannot be converted from one loan type to another. If you want a VA loan, you can do a VA refinance. That loan would pay off the existing HELOC but there is no way of which I am aware to just convert the existing loan.
  Reply to Michael

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