Reverse Mortgage

What is a HECM reverse mortgage?

Home Equity Conversion Mortgages (HECMs), also known as reverse mortgage loans, were created over 25 years ago to help Americans age 62 and older convert a portion of their home equity into tax-free money. HECM reverse mortgages are insured by the Federal Housing Administration (FHA) and allow seniors to age in place and achieve retirement security.

How does it work?

A reverse mortgage loan allows you to turn some of the equity in your home into cash to improve your lifestyle in whatever way you choose. You will continue to live in your home, retain ownership and will not be required to make any monthly mortgage payments during the loan period. Instead of repaying the loan monthly, the loan balance is repaid when all borrowers have left the home. You will be required to pay for property taxes, home insurance and home maintenance.

The loan balance also becomes due upon the occurrence of other events including non-compliance with the loan terms.

Qualifications Include:

  • The borrower on title must be 62 years or older (a non-borrowing spouse may be under age 62)
  • The home must be the borrower’s primary residence
  • The borrower must own the home (The borrower must meet the financial requirements of the HECM program)

Possible Advantages of HECM Reverse Mortgages

No monthly mortgage payments*

Tax free proceeds*

Keep your home

Federally-insured by the government

Frequently Asked Questions

Reverse Mortgages

Does the bank own my home?

No. Reverse mortgage borrowers retain ownership of their homes. They are not relinquishing title or ownership using a reverse mortgage, but borrowing against the value of the home. A borrower may not lose their home under normal circumstances, as long as they comply with loan terms.*

*Borrowers must continue to make property tax, insurance, and other maintenance payments in order to avoid risk of default.

How can I receive my reverse mortgage funds?

Reverse mortgage funds can be disbursed in a number of ways: full or partial lump sum, as a line of credit, through monthly payments, or a combination of any of these.

What if the loan amount exceeds the value of the home?

Reverse mortgages are non-recourse loans. What this means is that if somehow the loan balance ends up surpassing the value of the home, the lender cannot collect more than the value of the home. Under the HECM program, the difference between the loan balance and the home value is covered by the Federal Housing Administration’s (FHA) insurance fund.

Will it affect my Social Security, Medicare or pension benefits?

No, these benefits will not be impacted. Reverse mortgage funds are considered loan proceeds and not income. However, Medicaid and other income-based benefits† may possibly be affected. What’s more, the longer you wait to access Social Security benefits, the more you may receive. A reverse mortgage can help delay accessing Social Security in order to boost your lifetime retirement income*.

Consumer Safeguards

A number of consumer safeguards have been established to protect reverse mortgage borrowers. These protections ensure lenders like us are doing their jobs right, and that you and your family have a thorough understanding of how a reverse mortgage works. The following consumer safeguards were instituted for your benefit:

No Pre-Payment Penalty

You can choose to repay the loan at any time without incurring any additional costs.

Nonrecourse Loans

HECMs are considered nonrecourse loans in which the borrower can never owe more than what the house is worth at the time the loan is paid back.


All reverse mortgage applicants undergo independent, third-party counseling. This ensures that borrowers understand the financial implications associated with their reverse mortgage, what their obligations are and what other alternatives may be available to them. We encourage and support third-party counseling so that you feel completely comfortable with the process and understand your options.


HUD established principal limits on the amount of money you can borrow during the first year of your loan. This may ensure home equity proceeds last longer.

HUD Fee Limitations

HECM origination fees are regulated by HUD. Other HECM reverse mortgage costs may vary among creditors and loan types.

Greater Retirement Security

Financial advisors are including the reverse mortgage growing line of credit as part of their clients’ long-term retirement planning strategies, helping stretch other investments even longer into retirement.


Did you know you can buy a home with a reverse mortgage?

A HECM for Purchase loan combines a reverse mortgage with the equity from the sale of your previous home – or from other savings and assets – to buy your next primary home in a single transaction. Regardless of how long you live in the home or what happens to your home’s value, you only make one down payment towards the purchase.

Additional Benefits Include:

  • No monthly mortgage payments†
  • Increase your purchasing power
  • Contributes toward the down payment on the home purchase
  • Rightsize to a lower maintenance home
  • Buy a home closer to family and friends
  • Lower your cost of living during retirement

*Borrowers must continue to make property tax, insurance, and other maintenance payments in order to avoid risk of default.

Find out if a Reverse Mortgage is right for you!

Bob Smith, our Reverse Mortgage specialist will assist you in finding out if a reverse mortgage is the best option for you.

†Please consult with your tax advisor. †Borrower must continue to pay for property taxes, homeowner’s insurance and home maintenance. *Social Security benefits estimator available at **Required as part of loan. These materials are not from HUD or FHA and were not approved by HUD or a government agency. Borrowers must continue to make property tax, insurance, and other maintenance payments in order to avoid risk of default.