A reverse mortgage, explained clearly.
A reverse mortgage lets eligible homeowners 62 and older (and 55+ for some proprietary products, depending on state and program) turn a portion of home equity into funds without a monthly mortgage payment. Here's how it works and what to consider.
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Reverse mortgages
The big picture — HECM vs. proprietary, who qualifies, and the full set of trade-offs.
Higher-value homesJumbo reverse mortgages
Larger loan amounts, younger eligibility, and no FHA mortgage insurance.
Younger eligibilityReverse mortgage at 55
Proprietary programs from age 55 in qualifying states, including Utah.
Flexible fundingLine of credit
Draw funds over time, pay interest only on what you use — and unused funds can grow.
Retirement debtDebt consolidation
Using proceeds to ease monthly debt — and the equity trade-off that comes with it.
What is a reverse mortgage?
A reverse mortgage is a home loan that lets eligible homeowners borrow against the equity they've already built — without a required monthly mortgage payment. Instead of paying the lender each month, the loan balance (plus interest and fees) grows over time and is repaid when the home is sold or no longer serves as the borrower's primary residence.
For most homeowners, that means the FHA-insured Home Equity Conversion Mortgage (HECM), available to homeowners 62 and older. Some lenders also offer proprietary — sometimes called "jumbo" — reverse mortgages, which can have different loan limits and may start at a younger age depending on the state and program. Either way, a reverse mortgage is a loan, not free money: it has costs, it accrues interest, and it's repaid from the home's value.
Who a reverse mortgage may be for
Eligibility depends on age, ownership, equity, and program rules — and every program is reviewed on its own merits. No two situations are the same.
Age
FHA-insured HECM loans generally require you to be 62 or older. Some proprietary products may be available from 55+, depending on state and program.
Ownership
You must own your home — typically with substantial equity or outright — and it must remain your primary residence.
Equity
You borrow against your home's value. How much you may receive depends on your age, the appraised value, interest rates, and the specific program.
Counseling
For HECM loans, counseling with a HUD-approved reverse mortgage counselor is required before you can proceed. It's designed to protect you, not slow you down.
Two main types of reverse mortgage
This is a general comparison for education — not an offer, quote, or commitment. Programs, terms, and eligibility vary by lender, state, and underwriting.
| Factor | HECM (Home Equity Conversion Mortgage) | Proprietary / jumbo reverse mortgage |
|---|---|---|
| Who it's for | Homeowners 62 and older | May be available to homeowners 55+, depending on state and program |
| Insured by | The Federal Housing Administration (FHA) | Private lenders; not FHA-insured |
| Loan amount | Follows FHA lending limits | May allow larger ("jumbo") amounts |
| Counseling | Required — HUD-approved counselor, before the loan proceeds | Required or strongly recommended, depending on the program |
| How you receive funds | Lump sum, monthly payments, line of credit, or a combination — depending on the plan | Payment options vary by lender and program |
| Costs | Closing costs, mortgage insurance premiums, and servicing fees — typically financed into the loan | Similar cost structure; varies by lender and program |
General comparison for educational purposes only. Reverse mortgage programs, terms, and eligibility vary by lender, state, and underwriting. This is not a commitment to lend.
The path to a decision
A reverse mortgage is a considered decision — not a quick click. Here's the typical journey, step by step.
Talk it through
Share your situation with a WeFund Home Loans team member. We'll walk through whether a reverse mortgage fits — or whether another option makes more sense. No obligation.
Required counseling
For HECM loans, you'll complete counseling with a HUD-approved reverse mortgage counselor before anything moves forward. It's a federal requirement — and it protects you.
Appraisal, underwriting, and funding
The property is appraised, the loan is underwritten, and — if approved — funds are made available with no required monthly mortgage payment while the loan is open.
What to consider before a reverse mortgage
A reverse mortgage can be a useful tool for the right homeowner — and a poor fit for others. Here's a balanced look at both sides.
Potential benefits
- ✓No required monthly mortgage payment while the loan is open — interest and fees accrue to the balance instead
- ✓You may receive funds as a lump sum, monthly payments, a line of credit, or a combination — depending on the program
- ✓You keep the title to your home, and you can stay in it as your primary residence
- ✓Proceeds are generally not treated as taxable income — confirm with a tax professional
Things to weigh carefully
- !The loan balance grows over time as interest and fees accrue — which can reduce the equity left for you or your heirs
- !You remain responsible for property taxes, homeowners insurance, and maintenance — falling behind can put the loan into default
- !Upfront costs — origination, appraisal, closing, and mortgage insurance premiums on HECM loans — can be significant
- !If you sell the home or permanently move out, the loan generally becomes due — and counseling is required for HECM loans so these trade-offs are clear up front
Two common reverse mortgage approaches
How you draw funds depends on the program and your situation. Two common approaches — and both are worth asking about.
Reverse mortgage line of credit
Instead of taking a lump sum, some programs let you set up a line of credit you draw from over time — so funds are there when you need them, and you borrow only what you use. Availability and terms depend on the program and your eligibility.
Consolidating debt with a reverse mortgage
Some homeowners use reverse mortgage proceeds to pay off higher-rate debts, such as credit cards or auto loans — trading several payments for a single obligation. Whether it makes sense depends on your rates, balances, and the costs of the loan itself.
Reverse mortgage FAQ
Straight answers to the questions we hear most. Every situation is different — a counselor and your loan officer can go deeper.
What's the difference between a HECM and a proprietary reverse mortgage?
A HECM is the FHA-insured reverse mortgage — federally regulated, generally for homeowners 62 and older, with required HUD-approved counseling and FHA lending limits. Proprietary (sometimes called "jumbo") reverse mortgages are offered by private lenders; they may allow larger loan amounts and, depending on state and program, may be available from age 55+. Terms vary by lender, so it's worth comparing both against your situation.
Do I have to make monthly payments on a reverse mortgage?
Generally no — that's the defining feature. While the loan is open, no monthly mortgage payment is required; interest and fees accrue to the balance instead. You are still responsible for property taxes, homeowners insurance, and upkeep, and the loan must be repaid when the home is sold or is no longer your primary residence.
Who owns my home with a reverse mortgage?
You do. You keep the title, and the home remains yours as your primary residence. The loan is secured by the home, and it becomes due when the home is sold, you permanently move out, or the last borrower passes away.
Is reverse mortgage counseling really required?
Yes — for FHA-insured HECM loans, counseling with a HUD-approved reverse mortgage counselor is required before the loan can proceed. It's designed to make sure you understand the costs, obligations, and alternatives before you commit, and it's recommended before any reverse mortgage decision, regardless of program.
What happens to my heirs when I pass away or move out?
When the home is sold or is no longer your primary residence, the loan balance — including accrued interest and fees — must be repaid, typically from the sale proceeds. If the home sells for more than the balance, the remaining equity generally goes to you or your heirs. If the balance exceeds the home's value, HECM insurance typically covers the difference for FHA-insured loans; for proprietary loans, the terms vary by lender. Ask your counselor and loan officer to walk through your specific scenario.
Counseling is required — and so is clarity.
Before committing to any reverse mortgage, consult a HUD-approved reverse mortgage counselor. For FHA-insured HECM loans, counseling is required by federal rules — and it exists to make sure you understand the costs, obligations, and alternatives before you sign anything.
Talk through your scenario.
A reverse mortgage is a big decision — and it isn't right for everyone. A real conversation, no obligation and no pressure.