Is a Reverse Mortgage Worth It? 5 Things to Consider

Homeowners 62 and older are sitting on more housing wealth than at any time in history — $14.92 trillion as of the first quarter of 2026, according to the NRMLA/RiskSpan Reverse Mortgage Market Index. So it is no surprise that more people ask me whether a reverse mortgage is the right way to reach that equity. After 45 years in mortgage banking, my answer is always the same: it depends on your situation, and I can show you exactly what that is.

Below, we take a closer look at how a reverse mortgage works, its pros and cons, and the five factors that determine whether one is worth it for you:

• Eligibility and requirements
• Your long-term goals
• Impact on your home’s equity
• Interest rates and fees
• Alternative options

What Is a Reverse Mortgage?

A reverse mortgage is a loan that works in reverse of a traditional or “forward” mortgage. Instead of paying the balance down with a mandatory monthly payment, you borrow against your home with no required monthly payment, and the interest is added to the balance, so the balance rises over time. You keep the title, you continue to pay your property taxes and insurance, and the loan is repaid when the last borrower permanently leaves the home. The most common program is the Home Equity Conversion Mortgage (HECM), insured by the FHA and regulated by HUD.

Reverse Mortgage Pros and Cons

Pros

• No monthly mortgage payment is required — you remain responsible for property taxes, insurance, and upkeep
• Proceeds can be used for virtually anything
• Guaranteed line of credit on the HECM program — it cannot be frozen or reduced the way a HELOC can
• Non-recourse loan — you can never owe more than the value of the property
• No impact on Social Security or Medicare benefits

Cons

• Higher closing costs than traditional loans, driven by the FHA mortgage insurance premium
• Can affect needs-based programs such as Medicaid and Supplemental Security Income (SSI)
• The loan balance grows over time, which reduces the equity left for you or your heirs
• The loan becomes due when the last borrower permanently leaves the home

Reverse mortgages aren’t for everyone: Explore the pros and cons in detail →

1. Eligibility and Requirements

To be eligible for the HECM program, you must be at least 62 years of age (some private programs accept borrowers as young as 55 in certain states), the property must be your primary residence, you must pass HUD’s financial assessment and credit review, and the property must meet program guidelines.

The obligations continue after closing. As the owner, you are responsible for the timely payment of real estate taxes and homeowners insurance and for keeping the home in reasonable repair. Fall behind on those, and the loan can be called due and payable.

One piece of advice I give often: the property must remain the primary residence of at least one borrower for the life of the loan, so if you plan to relocate, get the reverse mortgage on the home you intend to stay in — not the one you are about to leave.

2. Your Long-Term Goals

The first question I ask a borrower is not about the house. It is about their plans. How long do you intend to stay? A reverse mortgage carries meaningful upfront costs, and those costs earn their keep when they are spread over many years in the home. If you expect to sell or move within a few years, the math rarely works in your favor.

Then think about what the money needs to do: bridge the gap so you can claim Social Security at a higher benefit later, pay for in-home care, retire an existing mortgage payment, or simply sit as a growing line of credit you control for emergencies. Each goal points to a different loan structure, which is why we lay the options out side by side instead of pushing one. And be honest about the home itself — if the two-story house will not suit you at 85, solving that problem may matter more than any loan.

Education here is not optional. HUD requires every borrower to complete a session with an independent HUD-approved counselor before a lender can move your application forward, so you will understand the program and your obligations before you commit one cent.

Expert Insight: “I would rather you not get a reverse mortgage for the right reasons than get one for the wrong reasons. A reverse mortgage that fits the borrower’s situation well is a genuinely useful financial tool. One that doesn’t fit is just a costly mistake with a long tail.”

3. Impact on Your Home’s Equity

Because no monthly payments are required, interest and mortgage insurance are added to your balance each month, and the balance rises over time. Your equity is the difference between the home’s value and that balance — so unless appreciation outpaces the accrual, the equity in the home will decline over the life of the loan. That is the trade you are making, and you should make it with your eyes open.

Here is what it means for your family. You keep the title and can sell whenever you choose, and every dollar above the loan balance belongs to you or your heirs. When the loan ends, your heirs can sell the home and keep the difference, or keep the property by paying off the balance. If the balance ever exceeds the home’s value, HUD’s 95% rule lets them satisfy the loan at 95% of the current appraised value, and the FHA insurance absorbs the shortfall — it never touches their other assets. That is the non-recourse protection working as designed.

You also have more control over your equity than most people realize. There are no prepayment penalties, so you can make voluntary payments of any size to slow or even reverse the balance growth. And if you take the line of credit and draw only as needed, interest accrues only on what you have actually borrowed — the slower you draw, the more equity you preserve.

4. Interest Rates and Fees

The fees on a HECM are higher than those on a standard forward mortgage because HUD charges mortgage insurance to insure the loan. The upfront Mortgage Insurance Premium is 2% of the lesser of the property value or the Maximum Lending Limit, which is currently $1,249,125, and a 0.50% annual renewal premium accrues on the balance. Add standard closing costs — an origination fee capped by HUD, appraisal, title — and a counseling fee of about $125.

I will not pretend those costs are small, but understand what the insurance buys you. Your line of credit is guaranteed for as long as the loan is in good standing: if property values fall or your lender goes out of business, your access is unaffected. It cannot be frozen or reduced arbitrarily, as a Home Equity Line of Credit (HELOC) can. Rates and margins also differ between lenders, and the margin affects both your available proceeds and how fast your balance grows — so compare offers the same way you would on any mortgage.

5. Alternative Options

The last thing to weigh is what else could accomplish your goal. Compare the reverse mortgage honestly against the realistic alternatives before you decide.

Downsizing is the classic example: sell the home and buy something smaller and more affordable. For some people that is exactly right, particularly when the current house is too large or unsafe to age in. But with the median existing home selling for $440,600 as of June 2026, the smaller replacement home often costs more than people expect once moving and closing costs are counted. When a move does make sense, the reverse mortgage for purchase program lets you buy the new home with no required monthly mortgage payment on it — a downsize and financial relief in one transaction.

A home equity loan or HELOC can also serve if you need a smaller amount and can comfortably carry the monthly payment. Just remember the trade-offs we cover in our HELOC vs reverse mortgage comparison: mandatory payments that rise with rates, and a credit line the bank controls.

So, Is a Reverse Mortgage Worth It?

For many homeowners, yes. For some, no. If you plan to stay in your home, want relief from a required monthly payment or a guaranteed reserve you control, and the costs fit the benefit you will use, the program earns its keep. If your horizon is short, or an alternative gets you there at a lower cost, take the alternative. Weigh the pros and cons of every option, bring in your trusted advisors and family where it helps, and use the counseling session to ask every question you have. We publish as much education as we can on this site for exactly that reason — an informed borrower makes the right call.

Want more information? Consult our complete guide to understanding reverse mortgages →

Frequently Asked Questions

Every borrower’s situation is different, and “worth it” is a personal calculation — your home, your plans, your numbers.

Is It Worth It for Your Home? Run your numbers with our reverse mortgage calculator to compare programs and see your available proceeds, or call us Toll-Free at (800) 565-1722. We will walk through both the pros and cons, and the decision is yours.