What is a reverse mortgage?

A reverse mortgage is a special type of loan that allows older homeowners to borrow against the equity (wealth) in their homes.

Here’s how a reverse mortgage works:

It is called a “reverse” mortgage because, instead of making payments to the lender, you receive money from the lender. The money you receive, and the interest charged on the loan, increase the balance of your loan each month. Over time, the loan amount grows. Since equity is the value of your home minus any loans, you have less and less equity in your home as your loan balance increases. Not everyone is eligible.

To qualify for a reverse mortgage:

  • You must be at least 62 years old.
  • Your home must be your primary residence.
  • You must have paid off some, or all, of your traditional mortgage.

Read more about reverse mortgage eligibility here.

Was this page helpful to you?

Note: Do not include sensitive information like your name, contact information, account number, or social security number in this field.

Legal disclaimer

The content on this page provides general consumer information. It is not legal advice or regulatory guidance. The CFPB updates this information periodically. This information may include links or references to third-party resources or content. We do not endorse the third-party or guarantee the accuracy of this third-party information. There may be other resources that also serve your needs.

Read full answer Hide full answer