In general, to be eligible for a reverse mortgage the youngest borrower on title must be 62 years old or older and have sufficient home equity. You must also meet financial eligibility criteria as established by HUD.
Determining whether or not there is sufficient equity in the home is an FHA calculation that takes into account:
- Current interest rate
- Whether the rate will be variable or fixed
- Age of the youngest homeowner
- FHA lending limits
- Appraised value of the home
You may need to set aside additional funds from loan proceeds to pay for taxes and insurance.
You can use the online reverse mortgage calculator to find out if you have sufficient equity and what the loan principal limit would be.
Frequently asked questions:
- If a homeowner is not 62 but they are permanently disabled, can they qualify?
- No. The FHA use age as a criteria to determine reverse mortgage eligibility and makes no exceptions for disability or Social Security status.
- Can someone qualify if they have a mortgage?
- Yes, as long as they have sufficient equity. Many homeowners who take out a reverse mortgage use it to pay off their existing mortgage, so they can stop making monthly mortgage payments.1
- Do all 62-year olds who own their home qualify?
- No. Some homeowners who want to get a reverse mortgage are not eligible because they don’t have enough equity built up in their home. In addition, some types of homes are not eligible and the borrower must also meet financial eligibility criteria as established by HUD.
- What happens if there isn’t enough home equity to qualify?
- This is called a “shortfall.” This means that the reverse mortgage would not provide enough money to pay off the existing mortgage on the home — it is coming up “short.” In this situation, some homeowners may choose to make up the difference by paying down the balance on their mortgage by the amount of the shortfall so that they can qualify for the reverse mortgage. However, most people who want a reverse mortgage and have a shortfall don’t have enough money to do this.
1 You must still live in the home as your primary residence, continue to pay required property taxes, homeowners insurance, and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.