Your Home Equity.
Working for You.
A reverse mortgage lets eligible homeowners age 62 and older convert a portion of their home equity into funds — without selling their home or making monthly mortgage payments. This page is designed to help you understand what it is, how it works, and whether it might be right for your situation.
Important Notice: This material is not from HUD or the FHA and has not been approved by HUD or any government agency. A reverse mortgage is a significant financial decision. HUD-approved independent counseling is required before proceeding. See below for details.
What a Reverse Mortgage
Actually Is
A reverse mortgage is a loan that allows homeowners age 62 or older to borrow against the equity in their primary home. Unlike a traditional mortgage where you make monthly payments to a lender, a reverse mortgage pays out to you — and the loan balance grows over time as interest accrues.
The most common type is the Home Equity Conversion Mortgage (HECM) — a program insured by the Federal Housing Administration (FHA). There are also proprietary reverse mortgage products from private lenders, typically for higher-value homes.
The loan does not become due until the last borrower permanently leaves the home — through selling, moving out, or passing away. At that point, the home is typically sold to repay the loan, and any remaining equity goes to the homeowner or their heirs.
This is a major financial decision. A reverse mortgage affects your home equity, your estate, and your options in retirement. HUD requires independent counseling before any reverse mortgage can be processed — and we strongly encourage taking the time to fully understand this product before moving forward.
Three Ways to
Access Your Equity
A HECM can be structured in several ways, and you can choose the option that best fits your financial situation. Each has different implications for how the loan balance grows over time.
These options can also be combined — for example, taking a partial lump sum to pay off an existing mortgage and setting up the remainder as a line of credit. Your Loan Officer can walk through the exact tradeoffs for each structure.
Who Qualifies for
a Reverse Mortgage?
How much can you borrow? The amount depends on the youngest borrower's age, the home's appraised value, the current interest rate, and the FHA lending limit. Generally, older borrowers with more equity in higher-value homes can access a larger percentage of their equity. A Loan Officer can give you a specific estimate on your call.
HUD-Approved Counseling
Is Not Optional
Before a HECM application can be submitted, federal law requires that all borrowers complete a counseling session with an independent, HUD-approved housing counselor. This is a consumer protection — not a sales step — and the counselor has no financial relationship with any lender.
Ongoing Obligations —
The Honest Picture
A reverse mortgage removes your monthly principal and interest obligation. But it does not remove all financial obligations tied to the home. Failing to meet these requirements can trigger the loan to become due — which is why lenders conduct a financial assessment before approving.
- Pay property taxes on time
- Maintain homeowner's insurance
- Keep the home in good repair
- Live in the home as primary residence (at least 6 months per year)
- Pay HOA dues if applicable
- Notify lender of extended absences (12+ months)
- Monthly principal payments
- Monthly interest payments
- Selling the home to repay the loan during your lifetime
When the Loan
Becomes Due
What to Weigh
Carefully
The loan balance grows over time. Interest accrues monthly and is added to the principal balance. Over many years, the balance may significantly exceed the original amount received.
Your equity decreases over time. As the balance grows, the equity in your home decreases. This may affect what you can leave to heirs or what options are available if you need to move later.
Tax and benefits implications vary. Reverse mortgage proceeds are generally not considered taxable income, but every situation is different. Consult a qualified tax advisor regarding your specific circumstances. Large lump sums may also affect eligibility for certain government benefit programs — consult with a benefits advisor before proceeding.
Alternatives may better serve your situation. A cash-out refinance, HELOC, or downsizing are alternatives that may be more appropriate depending on your equity, income, and goals. Your HUD counselor and Loan Officer can discuss all options with you without pressure to choose a specific product.
This material is not from HUD or the FHA and has not been approved by HUD or any government agency. New Point Lending, DBA Quazel Mortgage (NMLS #2133626) is an independently owned mortgage broker.
Have Questions?
We're Here to Help You Think It Through.
A reverse mortgage isn't right for everyone. Our goal is to help you fully understand your options — including alternatives — so you can make the best decision for your situation. No pressure, no sales pitch. Just an honest conversation.
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This material is not from HUD or the FHA and has not been approved by HUD or any government agency. HUD-approved independent counseling is required before proceeding with a reverse mortgage. Loan proceeds are generally not considered income for tax purposes, but consult a qualified tax advisor for your specific situation.