Will my children be able to keep my home after I die if I have a reverse mortgage loan?

Answer:

If your children are heirs and can pay off your reverse mortgage loan, they may be able to keep your home after you die.

It depends on whether they are heirs and can pay off the reverse mortgage loan.

Most reverse mortgages are Home Equity Conversion Mortgages (HECMs). The Federal Housing Administration (FHA), a part of the Department of Housing and Urban Development (HUD), insures HECMs. A HECM must be paid off when the last surviving borrower or eligible non-borrowing spouse dies or no longer maintains the home as his or her principal residence.

Note: This webpage has information about HECMs, which are the most common type of reverse mortgage.

It can be tricky to figure out when your loan must be paid off.  If you are the only borrower on the reverse mortgage (HECM) and:

  • You live alone, your loan must be paid off when you die.
  • You live with a spouse or partner, your loan generally must be paid off when you die.  In some cases, your surviving spouse or partner may be able to continue living in the home after you die. Check with your lender or servicer as well as a housing counselor or attorney to find out if your spouse or partner is eligible for this benefit. 

Warning: If your heirs cannot afford to repay the loan from other funds and your spouse or partner does not qualify to continue living in the house, your spouse or partner will most likely have to move.

  • You live with children, other relatives, or unrelated roommates, your loan must be paid off when you die.

Warning: If your heirs cannot afford to repay the loan from other funds, your children, other relatives, or unrelated roommates will most likely have to move.

If you are a co-borrower on the HECM reverse mortgage and:

  • You live alone because your co-borrower has died or already lives elsewhere, your loan must be paid off when you die.
  • You live with a spouse or partner who is a co-borrower on the reverse mortgage with you, your co-borrower can continue to live in the home after you pass away. But if they die too, your loan must be paid off.
  • You live with children, other relatives, or unrelated roommates. If your co-borrower is still living in the home your children, relatives, or unrelated roommates can continue to live there too when you die. But if your co-borrower dies, your loan must be paid off.

Warning: If your heirs cannot afford to repay the loan from other funds, your children, other relatives, or unrelated roommates will most likely have to move.

Note: Many heirs may lack funds to pay off the loan balance, and therefore, may need to sell the home in order to repay the reverse mortgage. With an FHA-insured HECM loan, if the loan balance is more than the home is worth, your heirs don’t have to pay the excess. After your heirs sell the home, the lender will take the proceeds from the sale as payment on the loan, and the FHA insurance will cover any remaining loan balance. 

If your heirs would like to keep your home instead of selling it, the loan must be paid off with another source of funds. But your heirs won’t have to pay more than the full loan balance or 95 percent of the home’s appraised value, whichever is less.

Get help

If you have questions, you and your spouse or partner should talk with a HUD-approved counselor to help you decide if a reverse mortgage is right for you. To talk to a HUD-approved reverse mortgage (HECM) counselor visit HUD's counselor search page, or call HUD's housing counselor referral line at (800) 569-4287.



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