HUD Reverse Mortgage Counseling 2026: Complete Guide to HECM Counseling Requirements

What Is Reverse Mortgage Counseling and Why Is It Required?

Reverse mortgage counseling is a mandatory educational session conducted by an independent, HUD-approved counselor before a borrower can proceed with a Home Equity Conversion Mortgage (HECM). The requirement was established by the Housing and Economic Recovery Act of 2008 and strengthened by subsequent regulations to protect seniors from predatory lending practices.

The counselor works for the borrower, not the lender. Their role is to ensure you fully understand how reverse mortgages work, what alternatives might better suit your situation, and what ongoing obligations you'll have after obtaining the loan. No lender can process your application without a valid counseling certificate.

What Topics Does HECM Counseling Cover?

HUD requires counselors to cover specific topics during the session. While the exact presentation may vary by counselor, all must address these core areas:

1. How Reverse Mortgages Work

The counselor will explain the basic mechanics of a HECM: how you receive funds, how interest accrues over time, when repayment is required, and how the loan balance grows throughout the life of the loan. They'll use your specific home value and age to illustrate realistic scenarios.

2. Payment Options

You'll learn about the different ways to receive HECM funds:

• Lump sum: Single payment at closing (fixed rate only)
• Monthly tenure: Equal payments for as long as you live in the home
• Monthly term: Equal payments for a fixed number of months
• Line of credit: Draw funds as needed, with unused balance growing
• Combination: Mix of monthly payments and credit line

3. Costs and Fees

The counselor must explain all costs associated with a HECM, including:

• Origination fees (capped by FHA)
• Upfront mortgage insurance premium (2% of home value)
• Ongoing mortgage insurance (0.5% annually)
• Third-party costs (appraisal, title, recording)
• Interest rates and how they affect loan balance growth
• Servicing fees (if applicable)

4. Borrower Obligations

A critical part of counseling covers what you must do to keep your loan in good standing:

• Property taxes: Must be paid on time
• Homeowner's insurance: Must maintain adequate coverage
• Property maintenance: Home must be kept in reasonable condition
• Primary residence: Must remain your primary home
• HOA fees: Must stay current if applicable

5. Alternatives to Reverse Mortgages

Counselors must discuss alternatives that might work better for your situation:

• Home equity loan or HELOC: Traditional borrowing options
• Selling and downsizing: May provide more cash and lower expenses
• Property tax assistance programs: Available in many states for seniors
• Public benefits: SSI, Medicaid, food assistance, etc.
• Family support: Loans from family members
• Sale-leaseback: Sell home but continue renting

6. Impact on Heirs and Estate

The counselor will explain how a reverse mortgage affects inheritance:

• Home equity decreases over time as loan balance grows
• Heirs can repay loan and keep home, or sell and keep remaining equity
• Non-recourse protection means heirs never owe more than home value
• Heirs have options and time to decide after borrower passes

7. Impact on Government Benefits

Counselors address how HECM proceeds affect benefits:

• Social Security and Medicare: Not affected (loan proceeds aren't income)
• Medicaid and SSI: May be affected if funds held at month-end
• Tax implications: Proceeds are tax-free; interest deduction when loan repaid

How to Find a HUD-Approved HECM Counselor

Only counselors who work for HUD-approved housing counseling agencies and hold specific HECM certification can provide valid counseling. Here's how to find one:

What to Expect During Your Counseling Session

Before the Session

To prepare for counseling:

• Gather your most recent mortgage statement (if applicable)
• Know your approximate home value
• Have a general idea of your monthly income and expenses
• List your questions and concerns
• Invite a family member or trusted advisor to participate (optional but encouraged)

During the Session (60-90 Minutes)

The counselor will:

1. Assess your situation: Discuss your financial goals and why you're considering a reverse mortgage
2. Explain HECM basics: How the loan works, payment options, costs
3. Review your obligations: Taxes, insurance, maintenance requirements
4. Discuss alternatives: Other options that might meet your needs
5. Answer questions: Address your specific concerns and scenarios
6. Verify understanding: Ensure you comprehend key concepts before issuing certificate

After the Session

If you demonstrate understanding of HECM terms and requirements, the counselor will:

• Issue a counseling certificate (required for loan processing)
• Provide written materials summarizing key points
• Answer follow-up questions if needed

How Much Does Reverse Mortgage Counseling Cost?

HECM counseling fees typically range from $125 to $175, with $125 being most common. Important points about costs:

• Fee structure: Many agencies charge flat fees; some use sliding scales based on income
• Free options: Some HUD-approved agencies offer free counseling for low-income borrowers
• Payment timing: Counselors cannot require payment before the session
• Payment options: Can be paid by borrower, family member, or from loan proceeds at closing
• No lender payment: Lenders cannot pay counseling fees directly (maintains independence)

Can Family Members Participate in Counseling?

Yes, family members, attorneys, financial advisors, or other trusted individuals can participate in your counseling session. HUD encourages this because:

• Family members may have relevant questions you haven't considered
• Having support can help you process complex information
• Family understanding reduces conflicts later
• Adult children often help parents with financial decisions

However, the decision to proceed with a reverse mortgage is ultimately the borrower's. Counselors ensure the borrower isn't being pressured by family members or others.

What If You Don't Pass Counseling?

Technically, you don't "pass" or "fail" counseling—but the counselor may decline to issue a certificate if you don't demonstrate understanding of key concepts. This rarely happens when borrowers engage genuinely with the process. If it occurs, you can:

• Schedule a follow-up session to review unclear areas
• Bring a family member to help you understand concepts
• Ask for materials in your preferred language
• Request accommodations for hearing, vision, or cognitive needs

Online vs In-Person HECM Counseling

HUD permits counseling by phone, video conference, or in person. Each format has advantages:

Tips for Getting the Most from Counseling

1. Be honest about your situation: The counselor can only help if they understand your true financial picture
2. Prepare questions in advance: Write down concerns so you don't forget to ask
3. Take notes: Even though you'll receive written materials, notes help you remember key points
4. Include family: Having a trusted person participate helps you process information and remember details
5. Don't rush: This is your opportunity to learn; ask for clarification on anything unclear
6. Be open to alternatives: The counselor may identify options you hadn't considered

Frequently Asked Questions About HECM Counseling