Reverse Mortgages (HECM)
A reverse mortgage, specifically the FHA-insured Home Equity Conversion Mortgage (HECM), lets homeowners age 62 and older turn part of their home equity into cash without selling. You keep title to the home. The loan is repaid when the last borrower sells, moves out permanently or passes away.
Key Takeaways
- HECM borrowers must be 62 or older and live in the home as their primary residence.
- HUD-approved counseling is required before you apply.
- You still must pay property taxes, homeowners insurance and maintenance.
- The loan is non-recourse: you or your heirs never owe more than the home’s value.
How does a HECM work?
Instead of you making monthly payments to a lender, the loan balance grows over time as interest and fees are added, while you stay in your home. The amount you can access depends on your age, the home’s value (up to the HECM limit), your interest rate and an assessment of your finances. For 2026, the maximum claim amount limit is $1,249,125. Homes worth more can still qualify, but the calculation uses that limit.
Who qualifies?
- Every borrower on title is 62 or older (rules differ for eligible non-borrowing spouses).
- The home is your primary residence.
- You have significant equity, or can pay off an existing mortgage with proceeds.
- You complete counseling with a HUD-approved counselor.
- You can keep up with taxes, insurance and upkeep.
What are the ways to receive funds?
| Option | How it works |
|---|---|
| Lump sum | One payment at closing |
| Line of credit | Draw when needed |
| Monthly payments | Fixed monthly amounts |
| Combination | Mix of the above |
What does it cost?
HECM loans carry an upfront mortgage insurance premium of 2% of the maximum claim amount, plus an annual premium of 0.50% of the balance. There are also closing costs and servicing fees, and interest accrues on the balance.
What are the risks and tradeoffs?
- The balance grows, so equity shrinks over time, leaving less for heirs.
- Costs are significant compared with some other options.
- You must keep paying taxes, insurance and maintenance or risk default.
- If you leave the home permanently for an extended period, the loan becomes due.
It is wise to compare alternatives such as downsizing, a HELOC, or a home equity loan. See specialty loans. Ask a tax professional or attorney about estate and tax questions.
Where can I learn more?
Our complete Reverse Mortgage (HECM) guide explains eligibility, payout choices and repayment in depth. See Types of Home Loans for how HECM compares with other options, and conventional loans if you are buying.
At Lendia, we explain the tradeoffs before you decide
At Lendia, we compare options from multiple lenders and encourage you to involve family in the decision. Contact us or get a rate quote now.
Frequently Asked Questions
Do I still own my home with a reverse mortgage?
Yes. You keep title and remain responsible for taxes, insurance and upkeep.
Can my heirs keep the home?
Yes. They can repay the loan, refinance it or sell the home. Because the loan is non-recourse, heirs are not personally responsible for any amount beyond the home’s value.
Will I owe more than my home is worth?
No. HECM loans are non-recourse.
Do I need counseling?
Yes, with a HUD-approved counselor before you apply.
Can I use a HECM to buy a home?
There is a purchase version, but eligibility is specific. Ask us.
Are payments required?
No monthly mortgage payment is required, but taxes, insurance and maintenance are your responsibility. Approval requires qualification.
Talk to a Licensed Lendia California Loan Officer
At Lendia, we review your situation and show you the programs you qualify for.