Reverse Mortgage (HECM) Explained: Eligibility & How It Works

Unlock the financial potential of your home with a Home Equity Conversion Mortgage (HECM), commonly known as a reverse mortgage.

Unlock the Financial Potential of Your Home with a Home Equity Conversion Mortgage (HECM)

A Home Equity Conversion Mortgage (HECM), commonly known as a reverse mortgage, allows you to access a portion of your home’s equity without making monthly mortgage payments.¹ If you are 62 years of age or older and have sufficient home equity, you may be able to receive cash to:

Pay off your existing mortgage
Pay medical bills, vehicle loans, or other debts
Improve your monthly cash flow
Fund home repairs or dream renovations
Build a financial “safety net” for unexpected expenses

HECM Loan Benefits

Whether you are planning to retire soon or are already retired, consider how you envision your retirement lifestyle. Even with careful planning, saving, and investing, you may find your resources are less than expected. A reverse mortgage could help by:

Eliminating your existing monthly mortgage payments¹
Allowing you to stay in your home and maintain ownership¹
Providing loan proceeds that are not taxed as income
Passing any remaining equity to your heirs after the HECM loan is repaid

Eligibility

To qualify for a HECM loan, you must meet the following requirements:

The youngest borrower on title must be at least 62 years old
You must live in the home as your primary residence and have sufficient equity
You must be able to pay off your existing mortgage using HECM loan proceeds
The property must be a single-family home, two-to-four unit owner-occupied residence, townhouse, approved condominium, or manufactured home
You must meet financial eligibility criteria as established by HUD

Additional Requirements

Once you obtain a HECM loan, you must continue to meet the following conditions to keep the loan in good standing:

Maintain your home according to FHA requirements
Continue to pay property taxes and homeowners insurance
Continue to own and live in the home as your primary residence

The loan becomes due and payable if:

You fail to meet any of the above obligations
The last borrower or non-borrowing spouse passes away

In such cases, heirs must repay the loan to inherit the property. Failure to repay may result in foreclosure.

This is not a commitment to lend. Any equity used in a refinance may decrease the amount of equity available to you in the future. Application approval is subject to complete underwriting review based on program guidelines; not all applicants may qualify. Limitations may apply. Not available for properties in Hawaii.

Your current mortgage(s) and any other existing liens against the property must be paid off at or before closing. You must live in the home as your primary residence, continue to pay required property taxes, and homeowners insurance, and maintain the home according to FHA HECM requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.