Can anyone apply for a reverse mortgage loan?
No. Not everyone can apply for a reverse mortgage.
There are certain requirements you must meet in order to be eligible for a reverse mortgage. The most common type of a reverse mortgage is called a Home Equity Conversion Mortgage (HECM). The Federal Housing Administration (FHA), a part of the Department of Housing and Urban Development (HUD), insures HECMs.
Note: This webpage has information about HECMs, which are the most common type of reverse mortgage.
To qualify for a HECM:
- You must be at least 62 years old.
- Your home must be your principal residence.
- You must own your home outright, or have a low mortgage balance that can be paid off at closing with proceeds from the reverse mortgage loan. There are limits to how much money you can borrow. So, if you still owe a lot of money on your traditional mortgage, you might not qualify for a reverse mortgage.
- You must have the money to pay ongoing property charges including taxes and insurance, as well as maintenance and repair costs.
- You must also meet with a HUD-approved counselor to discuss your eligibility, the financial implications of the loan, and other loan alternatives.
This program requires that you meet with a to discuss how a reverse mortgage works and how much it will cost you. The counselor must be approved by HUD. The FHA also requires that your home be in good shape. If your home is poorly maintained, you may need to repair it before you can get a HECM reverse mortgage.
If you have a spouse or other relatives living with you, think very carefully about their housing needs before applying for a reverse mortgage. Spouses (or others living with you) can apply together as co-borrowers if both parties are 62 or older. For most couples, this is the best choice if they decide to pursue a reverse mortgage. When spouses are listed as co-borrowers on their reverse mortgage, one spouse can continue to live in the home even if the other spouse dies or has to move to a nursing home. Unmarried couples, siblings, or others living in the home can also apply together as co-borrowers and receive the same benefits, as long as all borrowers are over age 62.
Note: Sometimes one spouse may not yet be 62, and therefore will not qualify as a co-borrower. A non-borrowing spouse may be able to remain in the home after the borrower dies if they qualify as an “eligible non-borrowing spouse.” Once your non-borrowing spouse turns 62, you may be able to refinance the reverse mortgage to include them, but there are costs associated with refinancing a reverse mortgage.
Warning: People who live in the house and are not co-borrowers or do not qualify as an eligible non-borrowing spouse will probably have to move when the borrower dies or moves out. In addition, if you have a reverse mortgage and leave your home for more than one year for a medical reason, those people who are not co-borrowers will probably have to move out of the home.
If you or your parents are considering a reverse mortgage, make sure you get all the facts first. We have several resources to help you learn more about reverse mortgages. Check out:
- from the CFPB’s Office for Older Americans
- Answers to common questions about reverse mortgages
- A video for an overview of reverse mortgages
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