Reverse Mortgages

HECM Highlights

Eligibility

A Home Equity Conversion Mortgage (HECM) is a federally insured reverse mortgage that allows homeowners 62 and older to convert their home equity into cash — without selling the home or making monthly mortgage payments. You choose how to receive your funds: a one-time lump sum, fixed monthly payments for as long as you live in the home, a line of credit you draw from as needed, or any combination. Interest accrues on the borrowed amount and the loan balance grows over time. The loan is repaid when you sell, permanently move out, or pass away. FHA insurance guarantees that you — or your heirs — will never owe more than the home is worth at the time of repayment.

You don't need to already own a home to use a reverse mortgage. The HECM for Purchase program lets you buy a new primary residence using reverse mortgage financing. You make a larger down payment (typically 50-60% of the purchase price from savings, the sale of a previous home, or other sources) and the HECM covers the rest — with no monthly mortgage payments going forward. This is ideal for retirees who want to downsize, relocate closer to family, or move into a more accessible single-story home while preserving their monthly cash flow.

A piggyback reverse mortgage combines a traditional forward mortgage (first lien) with a HECM reverse mortgage (second lien). The reverse mortgage makes the monthly payments on the first mortgage, effectively eliminating out-of-pocket housing costs for the borrower. This strategy can be useful when a standalone HECM doesn't provide enough proceeds — for example, on a higher-value property where the HECM limit caps the available funds. The forward mortgage covers the gap, and the reverse mortgage services the debt. Not all lenders offer this structure, and it requires careful structuring to ensure both loans work together. As a broker with access to 175+ lenders, I can source both sides of this transaction and coordinate the closing.

Do I still own my home? Yes. You retain the title and can live in the home as long as you want. The lender has a lien, just like any mortgage.

What happens when I pass away? Your heirs inherit the home. They can sell it and keep any equity above the loan balance, refinance into a traditional mortgage to keep it, or let the lender sell it. FHA insurance ensures they never owe more than the home's value.

Can I outlive my reverse mortgage? No. As long as you live in the home, maintain it, and pay taxes and insurance, you can never be forced to move — even if the loan balance exceeds the home's value.

Are reverse mortgage proceeds taxable? No. Loan proceeds are not considered income and are not taxed. Consult a tax advisor for your specific situation.

How much can I borrow? The amount depends on your age (older = more), current interest rates (lower = more), and your home's appraised value (capped at the FHA limit). A rough estimate: ages 62-65 can access about 40-50% of the home's value; age 75+ can access 55-65%.