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?”
Neither FHA nor VA offers loans directly. HUD, through FHA, insures loans, and the VA guarantees loans (or at least a portion of the loan). However, they still do not offer the loans – it is up to lenders to provide them and have them insured and guaranteed by those entities.
I hear of a “reverse mortgage for veterans” every few years. When I research it, there are multiple articles and plenty of information wherein people call their program a “Veteran’s Reverse Mortgage,” or a “Kosher VA Reverse Mortgage,” or other such wording. I am still waiting to see an actual program that is a reverse mortgage loan under a separate set of guidelines, offered by lenders and guaranteed by the VA.
Since I have received this question several times recently and would never claim I have a corner on all knowledge (and my wife will vouch for that), I looked again when I received your request to see if there was any new information. I first checked the US Department of Veterans Affairs website. They talk about the lending programs available to US Veterans.
Information is available about Purchase and Cash-out Refinance Loans, Interest Rate Reduction Refinance Loans (aka IRRRL), and even Native American Direct Loans – but no VA guaranteed Reverse Mortgages. When I type reverse mortgage in the search box, it takes me to a page on the index that is a warning issued by the Consumer Finance Protection Bureau in conjunction with the VA warning lenders and other advertisers to keep their advertising clean!
The notice from 2012 warns everyone that it is a crime to promise things that are not available and to mislead veterans and older Americans into thinking that there are programs that are not available. The notice specifically names reverse mortgages and those who would mislead consumers into thinking that there was a government affiliation that did not exist.
I was 99.9% sure of what I would find before I checked because, as a National Reverse Mortgage Lenders Association member, we receive constant updates on programs as they become available. Had there been a VA Reverse mortgage released recently or about to be, even though we are not a VA-approved lender, I was confident that information would have reached us by now.
I think you have gotten the same thing many borrowers have, some notification wherein the term “VA Reverse Mortgage” or other similar language was used. Still, they call the program a HECM – the acronym for a Home Equity Conversion Mortgage, the HUD or FHA program, not a VA 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:
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 VS HECM Product Comparison
|Compare Features||VA Mortgage||HECM Reverse Mortgage|
|Borrower Minimum Age||18||62|
|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|
Does the VA offer reverse mortgages?
Can you refinance a VA loan to a reverse mortgage?
Can I sell my house if I have a reverse mortgage?
Can you refinance a reverse mortgage to a VA loan?
Can a reverse mortgage impact my ability to secure a VA loan?
ARLO recommends these helpful resources: