What is a Reverse Mortgage?

A reverse mortgage, also known as the home equity conversion mortgage (HECM) in the United States, is a financial product for homeowners 62 or older who have accumulated home equity and want to use this to supplement retirement income. Unlike a conventional forward mortgage, there are no monthly mortgage payments to make. Borrowers are still responsible for paying taxes and insurance on the property and must continue to use the property as a primary residence for the life of the loan.

These loan products can be a challenge to explain or understand, even for people who have plenty of financial experience. We've put together this introductory article in hopes of better explaining the basics. In general, it's easiest to explain these loans by beginning with a comparison to a better known financial product, the home equity loan. At its core, the reverse mortgage is a home equity loan that's designed to help seniors tap into the equity in their homes. This loan is only available to homeowners who are 62 or older and have built up substantial home equity.

Who is Eligible for a Reverse Mortgage?

One of the strengths of the HECM program is that there are not overly restrictive requirements, making these loans easier to qualify for than other financial products such as a mortgage refinance, home equity loan, or home equity line of credit (HELOC).

You are eligible for a reverse mortgage if:

  • You are 62 years of age or older
  • You own your home and use it as your primary residence
  • The house is single family, multi-family (up to 4), or an approved condominium or manufactured home
  • You own your own home free and clear or only have a small amount left to pay on the existing mortgage
  • Your home is in good condition prior to taking out the loan

You must meet with a HUD approved counselor before obtaining a reverse mortgage to determine if the product is suitable for your needs. The counseling sessions will help you understand how the loan works and different alternatives that are available to you.

All prospective borrowers must also undergo a financial assessment to qualify. This assessment makes sure that the borrower can pay for:

  • Property taxes
  • Homeowner's insurance
  • Basic home maintenance
  • Home Owner's Association (HOA) fees if applicable

Connect with a Loan Officer

Loan Officer Thomas Johnston

Loan Officer Thomas Johnston | NMLS# 1583463; Arizona, California, Oregon, Texas and Washington

Thomas is your mortgage loan originator, who works side by side with a strong team that shares the same devotion to excellence.
Experienced, knowledgeable, and always up to date on the industry's latest products, Thomas strives to exceed the customers' expectations in each and every transaction.

Do you have any questions? Please call 866-610-6025

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California Reverse Mortgage Calculator

California Reverse Mortgage



Connect with a Loan Officer

Loan Officer Thomas Johnston

Loan Officer Thomas Johnston | NMLS# 1583463; Arizona, California, Oregon, Texas and Washington

Thomas is your mortgage loan originator, who works side by side with a strong team that shares the same devotion to excellence.
Experienced, knowledgeable, and always up to date on the industry's latest products, Thomas strives to exceed the customers' expectations in each and every transaction.

Do you have any questions? Please call 866-610-6025