Is It Right for You?
How the HECM Program Works
There is a lot to consider before deciding whether a HECM is right for you. As part of that process, you will meet with a HUD-approved HECM counselor to review program eligibility, the financial implications, and the alternatives to a HECM, as well as what happens when the loan becomes due and payable. After counseling, you should be able to make an independent, informed decision about whether the program meets your specific needs.
There are borrower and property requirements you will need to meet. Review the guidelines below, and if you qualify, you can move forward with a reverse mortgage application through an FHA-approved lender.
Regular HECM Requirements
— jumbo/proprietary requirements differ, see proprietary counseling options
Borrower Requirements
You must:
- Be 62 years of age or older
- Own the property outright, or have paid down a considerable amount
- Occupy the property as your principal residence
- Not be delinquent on any federal debt
- Have the financial resources to keep up with property taxes, insurance, and HOA fees
- Complete a consumer information session with a HUD-approved HECM counselor
Property Requirements
Eligible property types must meet FHA property standards and flood requirements:
- Single-family home, or a 2–4 unit home with one unit occupied by the borrower
- HUD-approved condominium project
- Manufactured home that meets FHA requirements
Financial Requirements
- Income, assets, monthly living expenses, and credit history will be verified
- Timely payment of real estate taxes and hazard/flood insurance will be verified
Adjustable-Rate Mortgages
Payout of Proceeds
Tenure
Equal monthly payments for as long as at least one borrower lives in and occupies the property as a principal residence.
Term
Equal monthly payments for a fixed number of months you select.
Line of Credit
Unscheduled payments, or in installments, at times and amounts of your choosing, until the line of credit is exhausted.
Modified Tenure
A line of credit combined with scheduled monthly payments for as long as you remain in the home.
Modified Term
A line of credit combined with monthly payments for a fixed number of months you select.
Fixed-Rate Mortgages
Single Disbursement Lump Sum
Fixed-rate HECMs are paid out as a single lump-sum disbursement at closing rather than through one of the adjustable-rate payment plans above.
What Determines Your Mortgage Amount
The amount you may borrow depends on the age of the youngest borrower or eligible non-borrowing spouse, the current interest rate, and the lesser of: your home’s appraised value, the HECM FHA mortgage limit of $726,525, or the sales price (for a HECM for Purchase).
If there is more than one borrower and no eligible non-borrowing spouse, the age of the youngest borrower is used to determine the amount you can borrow.
Ready to find out if a HECM is right for you?
Meet with a HUD-approved counselor to walk through your eligibility and options.