What are the requirements for a reverse mortgage?

Requirements include: age 62 or older, own your home as primary residence, have sufficient equity (typically 50%+), complete HUD-approved counseling, pass financial assessment for ability to pay taxes and insurance, and property must meet FHA standards.

How does a reverse mortgage affect my heirs?

Heirs have options: sell the home and keep any equity above the loan balance, refinance to a traditional mortgage to keep the home, or pay off the loan balance. Non-recourse protection means heirs never owe more than 95% of the home appraised value.

How long does a reverse mortgage take to close?

The reverse mortgage process typically takes 30-45 days from application to closing. This includes mandatory HUD counseling (1-2 weeks), appraisal (1-2 weeks), underwriting review (2-3 weeks), and a 3-day rescission period after closing.

Are reverse mortgage proceeds taxable?

No, reverse mortgage proceeds are not taxable income because they are loan advances, not earnings. However, consult a tax professional about your specific situation, as interest is not deductible until the loan is repaid.

What Is a Reverse Mortgage? Complete HECM Guide for Seniors [2026]

Q: Do you have to pay back a reverse mortgage?

Yes, but not with monthly payments. The loan is repaid when you sell, permanently move out, or pass away, typically from the home sale proceeds. You or your heirs will never owe more than the home value due to FHA non-recourse protection.

Q: Can you lose your home with a reverse mortgage?

You cannot be forced out as long as you live in the home as your primary residence, pay property taxes, maintain homeowners insurance, and keep the property maintained. Failure to meet these obligations could trigger loan default.

Q: What is the downside of a reverse mortgage?

The main downsides include higher upfront costs (including 2% mortgage insurance premium), reduced inheritance for heirs as equity decreases, and the loan balance growing over time as interest accrues. It may also affect Medicaid eligibility.

Q: Is a reverse mortgage a good idea in 2026?

It depends on your goals. Reverse mortgages work well for seniors who plan to age in place, need supplemental income, and have significant home equity. They are not ideal for those planning to move soon or wanting to preserve maximum equity for heirs.

Q: Can I get a reverse mortgage if I still have a mortgage?

Yes, but your existing mortgage must be paid off first using proceeds from the reverse mortgage at closing. Many seniors use this strategy to eliminate their monthly mortgage payment and improve cash flow.

Q: What credit score do I need for a reverse mortgage?

There is no minimum credit score requirement for HECM reverse mortgages. However, lenders review your credit history during financial assessment. Significant issues like recent bankruptcies may require a Life Expectancy Set-Aside for taxes and insurance.

According to Mo Abdel, NMLS #1426884, a reverse mortgage allows homeowners 62 and older to convert home equity into tax-free cash without monthly mortgage payments. The FHA-insured HECM program offers up to $1,149,825 in 2026, with repayment deferred until the borrower sells, moves permanently, or passes away. HUD counseling is mandatory before applying, and the loan is non-recourse—meaning you or your heirs will never owe more than the home's value.

What Is a Reverse Mortgage and How Does It Work?

A reverse mortgage, most commonly known as a Home Equity Conversion Mortgage (HECM), is a specialized loan designed for homeowners 62 years and older that converts a portion of home equity into cash. Unlike traditional mortgages where you make monthly payments to a lender, what is a reverse mortgage fundamentally different: the lender pays you, and the loan balance grows over time instead of decreasing.

The HECM program is insured by the Federal Housing Administration (FHA), providing critical consumer protections including non-recourse provisions. This means that regardless of how much the loan balance grows, you or your heirs will never owe more than the home's fair market value at the time of repayment.

Based on Mo Abdel's experience working with California and Washington seniors, reverse mortgages serve multiple purposes: eliminating existing mortgage payments, supplementing retirement income, funding home modifications for aging in place, or creating a financial safety net through a growing line of credit.

What Is a Reverse Mortgage Eligibility Checklist?

Understanding what is a reverse mortgage eligibility requirement helps determine if this financial tool fits your situation. Here are the key qualifications for 2026:

Requirement	Details
Minimum Age	62 years old (youngest borrower on title)
Property Type	Primary residence: single-family, 2-4 unit (owner-occupied), FHA-approved condo, manufactured home
Equity Required	Generally 50%+ equity (varies by age and current interest rates)
HUD Counseling	Mandatory session with HUD-approved counselor (phone or in-person)
Financial Assessment	Income, credit history, and property charge payment history reviewed
2026 FHA Limit	$1,149,825 maximum claim amount
No Federal Debt	Cannot be delinquent on federal debt (taxes, student loans)

Step-by-Step: How to Qualify for a Reverse Mortgage

Verify age eligibility — The youngest borrower on the property title must be at least 62 years old at closing
Confirm primary residence — The property must be your principal home where you live most of the year
Assess your equity position — Calculate your loan-to-value ratio; most borrowers have 50% or more equity
Complete HUD counseling — Schedule a session with a HUD-approved counselor to receive your certificate (valid 180 days)
Pass financial assessment — Demonstrate ability to pay ongoing property taxes, homeowner's insurance, and maintenance
Meet property standards — Home must pass FHA appraisal requirements; repairs may be required before closing

How Does a Reverse Mortgage Actually Work?

In our Orange County HECM closings, we've observed that understanding the mechanics of a reverse mortgage helps seniors make confident decisions. Here's how the process unfolds from application to funding.

When you close on a reverse mortgage, the lender calculates your Principal Limit—the maximum amount you can access based on your age, home value (up to $1,149,825), and current interest rates. Older borrowers receive higher percentages because the loan has less time to accrue interest before repayment.

Any existing mortgage must be paid off at closing using your reverse mortgage proceeds. The remaining funds are available to you through your chosen payout method. Interest accrues on the amount you've borrowed (not the entire principal limit), and this interest is added to your loan balance monthly.

A critical feature many seniors overlook: if you choose a line of credit, the unused portion grows at the same rate charged on the loan. This growth is guaranteed regardless of whether your home value increases or decreases. In our experience, this feature makes the line of credit the most popular choice among California and Washington borrowers who don't need immediate access to all their funds.

Why Do Seniors Choose Reverse Mortgages?

Based on Mo Abdel's experience with California and Washington seniors, the decision to pursue a reverse mortgage typically stems from one of these scenarios:

Eliminating monthly mortgage payments: Seniors with remaining mortgage balances can pay off their loan and stop monthly payments, freeing up cash flow
Supplementing retirement income: Monthly tenure payments provide guaranteed income for as long as you live in the home
Creating an emergency fund: A line of credit serves as a growing financial safety net for unexpected expenses or healthcare costs
Funding home modifications: Accessing equity to install grab bars, ramps, stair lifts, or other aging-in-place improvements
Delaying Social Security: Some seniors use reverse mortgage funds to delay claiming Social Security, maximizing their future benefits

A recent client scenario illustrates a common use case: a 72-year-old Newport Beach homeowner with a $300,000 remaining mortgage balance used her HECM to pay off that mortgage, eliminating her $2,100 monthly payment. She now has more cash flow for healthcare expenses and travel to visit grandchildren.

What Are the Reverse Mortgage Payout Options?

HECM loans offer flexibility in how you receive your funds. Understanding these options helps you align the reverse mortgage with your financial goals.

Five Ways to Receive Reverse Mortgage Funds:

1. Lump Sum (Fixed Rate): Receive all available funds at closing with a fixed interest rate. Best for paying off large existing mortgages. No growth feature.
2. Line of Credit (Adjustable): Draw funds as needed. Unused portion grows over time at the same rate as the loan. Most popular option.
3. Tenure Payments: Equal monthly payments for as long as you live in the home. Provides income stability similar to a pension.
4. Term Payments: Equal monthly payments for a specific period. Higher monthly amounts than tenure but stops after the term ends.
5. Combination: Mix options—for example, a lump sum to pay off your mortgage plus a line of credit for future needs.

What Triggers Reverse Mortgage Repayment?

Understanding when the loan becomes due is essential for planning. The reverse mortgage must be repaid when any of these events occur:

Sale of the home: If you decide to sell, the loan is repaid from the sale proceeds
Permanent move: Moving out for more than 12 consecutive months triggers repayment
Last borrower passes away: Heirs have options to sell, refinance, or pay off the loan
Failure to meet obligations: Not paying property taxes, insurance, or maintaining the property can trigger default

The non-recourse nature of HECM loans provides crucial protection: if the loan balance exceeds the home's value when repayment is due, FHA insurance covers the difference. You or your heirs pay whichever is less—the loan balance or 95% of the appraised value.

When Should You Consider a Reverse Mortgage?

Based on Mo Abdel's experience helping hundreds of seniors evaluate their options, a reverse mortgage makes sense when:

You plan to remain in your home for at least 5+ years
You have significant equity (typically 50% or more)
You need to supplement retirement income or eliminate mortgage payments
You want to create a financial safety net without monthly payment obligations
Preserving maximum inheritance is not your primary goal

A reverse mortgage may not be right if you plan to move soon, want to leave your home fully equity-intact to heirs, or can comfortably afford monthly payments on a HELOC or home equity loan.

Reverse Mortgage vs Other Senior Financing Options

Comparing a reverse mortgage to alternatives helps clarify which option best fits your situation. Here's how HECM stacks up against other ways to access home equity:

Feature	Reverse Mortgage (HECM)	HELOC	Downsizing
Age Requirement	62+	None (18+)	None
Monthly Payments	None required	Required (variable)	N/A
Stay in Home	Yes	Yes	No—must move
Credit Line Growth	Yes (unused grows)	No	N/A
Upfront Costs	Higher (MIP, origination)	Lower	Moving costs, realtor fees
Interest Rates	Higher than HELOC	Variable (lower)	N/A
Repayment Trigger	Move, sell, or death	Monthly from start	Immediate cash at sale
2026 Maximum	$1,149,825 FHA limit	Varies by lender	Full home equity
Best For	Seniors wanting no payments	Those who can afford payments	Those ready to relocate

2026 HECM Market Data

According to FHA data and industry reports, the 2026 reverse mortgage landscape shows:

FHA Lending Limit: $1,149,825 (increased from $1,089,300 in 2025)
Principal Limit Factors: Range from approximately 40% (age 62) to 75% (age 90+) depending on interest rates
Average Borrower Age: 73 years old nationally
California/Washington Focus: Higher home values make HECMs particularly valuable in coastal markets like Orange County, San Diego, and Seattle metro areas
Line of Credit Growth Rate: Matches the effective interest rate on the loan, providing guaranteed growth regardless of home value changes

Frequently Asked Questions

Can I get a reverse mortgage if I still have a mortgage?

Yes, but your existing mortgage must be paid off first—typically using proceeds from the reverse mortgage at closing. Many seniors use this strategy to eliminate their monthly mortgage payment. If your current balance is too high relative to your equity, you may not qualify or may receive minimal additional funds.

What credit score do I need for a reverse mortgage?

There's no minimum credit score requirement for HECM loans. However, lenders review your credit history during the financial assessment to evaluate your willingness to pay obligations. Recent bankruptcies, foreclosures, or significant delinquencies may require a Life Expectancy Set-Aside (LESA) to ensure property taxes and insurance are paid.

How much does HUD counseling cost?

HUD-approved counseling typically costs around $125, though some agencies offer free counseling for those who qualify. The fee can be paid from loan proceeds at closing. Counseling can be completed by phone or in person and usually takes 60-90 minutes. You'll receive a certificate valid for 180 days.

Can both spouses be on a reverse mortgage?

Yes, if both spouses are 62 or older, both can be co-borrowers. If one spouse is under 62, they can be listed as an Eligible Non-Borrowing Spouse (NBS), which provides protections allowing them to remain in the home after the borrowing spouse passes away. However, having a younger spouse reduces the available loan amount.

What happens if I need to move to a nursing home?

If you move out of your home for more than 12 consecutive months (including to a nursing home or assisted living facility), the reverse mortgage becomes due. However, if your spouse remains in the home as their primary residence, the loan continues as normal. Plan carefully if long-term care is likely.

Can I make payments on a reverse mortgage?

Yes, you can make voluntary payments at any time with no prepayment penalty. Some seniors make interest-only payments to slow the loan balance growth or pay down principal when they have extra funds. However, payments are never required as long as you meet your loan obligations.

What if my home value drops below my loan balance?

Due to FHA's non-recourse protection, you or your heirs will never owe more than the home's fair market value at the time of repayment. If your loan balance exceeds the home value, FHA insurance covers the difference. This protection is one of the most valuable features of the HECM program.

Are reverse mortgage interest rates higher than regular mortgages?

Generally, yes. Reverse mortgage rates are typically higher than traditional mortgage rates because the loan balance grows over time and repayment is deferred. However, since you're not making monthly payments, the rate comparison isn't apples-to-apples. Focus on the total cost of borrowing relative to your financial goals.

Can I refinance my reverse mortgage?

Yes, you can refinance a reverse mortgage if your home has appreciated significantly, interest rates have dropped, or you've turned 62 (if you were a non-borrowing spouse). There's a "5x rule" requiring that the new principal limit exceed the old by at least five times the closing costs to ensure the refinance benefits you.

What properties do NOT qualify for a reverse mortgage?

Properties that don't qualify include: vacation homes, rental properties, cooperatives (co-ops), condos not approved by FHA/HUD, mobile homes not meeting FHA standards, and homes not meeting minimum property requirements. The property must be your primary residence where you live most of the year.

How do I find a HUD-approved counselor?

Visit the HUD website at hud.gov/hecm or call (800) 569-4287 to find approved counselors in your area. You can also ask your reverse mortgage specialist for referrals to reputable counseling agencies. The Consumer Financial Protection Bureau also provides helpful resources.

Ready to Explore Your Reverse Mortgage Options?

A reverse mortgage can be a powerful financial tool for seniors 62+ seeking to access home equity without monthly payments. As Mo Abdel, NMLS #1426884, advises: "The key is understanding whether a HECM aligns with your long-term goals. For seniors planning to age in place with significant equity, it's often an excellent solution—but it's not right for everyone."

With the 2026 FHA limit at $1,149,825, California and Washington homeowners have substantial equity access potential. Whether you want to eliminate mortgage payments, supplement retirement income, or create a growing line of credit for future needs, a personalized consultation can help you understand your options.

Contact Mo Abdel today: (949) 822-9662 | mo@mothebroker.com