For homeowners of retirement age. A HECM, the FHA-insured reverse mortgage, is for homeowners 62 and over. A proprietary reverse mortgage may be open to homeowners from 55 in some cases. Read how it works, and the cautions, before you choose one.
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Fidelity Residential · NMLS #103098 · Equal Housing Lender
A reverse mortgage lets homeowners of retirement age turn part of their home’s value into cash while they keep living in the home and keep the title.
No monthly mortgage payment is required. Instead, interest and other charges are added to the balance each month, so the balance grows and the equity left in the home shrinks.
The money can come in several ways. Depending on the program: a lump sum, monthly payments, a line of credit drawn when needed, or a combination.
It is repaid later, usually from the home. The loan comes due when the last borrower dies, sells or moves out permanently. Heirs can keep the home by repaying the loan, or sell it and keep any value left after the loan is repaid.
The Home Equity Conversion Mortgage: designed by HUD, insured by FHA, for homeowners 62 and over. HUD sets a limit each year on the home value the loan can be based on. Because of the FHA insurance, you or your heirs never owe more than the home is worth when it is sold. A manufactured home that meets HUD’s rules can be covered by a HECM, and only by a HECM.
A private program without FHA insurance, for higher-value homes and some younger homeowners. It may be open from 55 in some cases. The payout choices, the protection for a spouse who is not on the loan, and what happens if the home is worth less than the balance can differ from a HECM, so ask before choosing.
What is reviewed. Your credit history, whether property taxes and insurance have been paid on time, and whether your income leaves enough each month after bills. If not, part of the loan can be set aside to pay taxes and insurance.
Throughout the loan you must keep living in the home as your main residence, keep paying property taxes, homeowner’s insurance and any association dues, and keep the home in repair.
If you do not, the loan can become due, and you could lose the home to foreclosure.
Before you apply, counseling with an independent counselor is required. For a HECM, the counselor comes from HUD’s list. A spouse who is not on the loan must take part too.
The plain facts about the cost and the risk.
A HECM, the FHA-insured reverse mortgage, is for homeowners 62 and over who live in the home as their main residence. A proprietary reverse mortgage may be open to homeowners from 55 in some cases.
A spouse who is not on the loan must take part in counseling. Under the FHA-insured program, an eligible spouse may be able to stay in the home after the borrower dies if conditions are met. Proprietary programs may not offer this, so ask before choosing.
With a HECM, no: because of the FHA insurance, you or your heirs never owe more than the home is worth when it is sold. A proprietary reverse mortgage has no FHA insurance; ask what applies before you choose.
Depending on the program: a lump sum, monthly payments, a line of credit drawn when needed, or a combination.
Fidelity Residential is licensed in many states. The full, current list is on NMLS Consumer Access (opens in a new tab), or call us at 732-686-9999.
A licensed loan officer can explain both kinds and help you weigh whether one fits you.
This page is general information, not a commitment to lend. Programs, terms and eligibility depend on credit, income, property and underwriting review and are subject to change without notice.
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