Date of Last Revision: August 8, 2026

A reverse mortgage is a special type of home loan for adults aged 62 or older. Instead of making monthly payments to a lender, the lender sends money to the homeowner based on their home equity. The loan does not need to be paid back until the owner moves, sells the home, or passes away.

How It Works

• Age Requirement: You must be at least 62 years old.

• No Monthly Payments: You do not pay a monthly mortgage bill.

• Loan Growth: The loan balance grows larger over time as interest and fees add up.

• Ongoing Duties: You must still pay property taxes, buy home insurance, and keep the house in good shape.

Types of Reverse Mortgages

• HECM: A Home Equity Conversion Mortgage is insured by the government and is the most common option.

• Single-Purpose: Offered by local governments or charities for specific costs like home repairs.

• Proprietary: Private loans meant for people with higher-value homes.

For these kinds of loans, you should receive Truth-in-Lending disclosures. If you are shopping for a reverse mortgage, you will also receive a Good Faith Estimate (GFE) and a HUD-1 or HUD-1A Settlement Statement. Please see below:

There are three main types of reverse mortgages: Home Equity Conversion Mortgages (HECMs), proprietary reverse mortgages (jumbo loans), and single-purpose reverse mortgages. Each option serves different financial situations, home values, and borrower age requirements.

Home Equity Conversion Mortgages (HECMs)

• Definition: Federally insured loans backed by the U.S. Department of Housing and Urban Development (HUD) and issued by FHA-approved lenders.

• Popularity: The most common and widely used reverse mortgage.

• Requirements: Borrowers must be 62 or older and complete mandatory HUD counseling.

• Uses: Highly flexible; funds can cover general living expenses, medical bills, or major repairs.

Proprietary Reverse Mortgages

• Definition: Private, non-government-insured jumbo loans offered directly by individual private lenders.

• Focus: Designed for higher-value properties that exceed standard federal lending limits.

• Requirements: Some private programs lower the minimum age requirement to 55 in certain states.

• Uses: Flexible payouts, though consumer protections and costs vary depending on the private lender.

Single-Purpose Reverse Mortgages

• Definition: Niche loans offered by state/local government agencies and non-profit organizations.

• Cost: Generally the least expensive option available.

• Requirements: Restricted to low-to-moderate-income homeowners.

• Uses: Strictly limited to a single approved expense specified by the lender, such as specific home improvements or local property tax relief.

Reverse mortgages are increasing in popularity with seniors who have equity in their homes and want to remain in their homes or supplement their income. The only reverse mortgage insured by the U.S. Federal Government is called a Home Equity Conversion Mortgage (HECM), and is only available through a Federal Housing Administration (FHA)-approved lender. The HECM is the FHA's reverse mortgage program that enables you to withdraw a portion of your home's equity to use for home maintenance, repairs, or general living expenses. HECM borrowers may reside in their homes indefinitely as long as property taxes and homeowner's insurance are kept current.

The amount that will be available for withdrawal varies by borrower and depends on:

• Age of the youngest borrower or eligible non-borrowing spouse;

• Current interest rate; and

• Lesser of appraised value or the HECM FHA mortgage limit or the sales price.

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.

You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing. To learn more about FHA's HECM program:

• Counselors

  • To find a reverse mortgage counselor near you, search the HECM Counselor Roster or call (800) 569-4287.

  • To find a reverse mortgage counselor that provides telephone and face-to-face counseling nationwide, use the HUD Intermediaries Providing HECM Counseling Nationwide list.

• Lenders

  • To find a reverse mortgage lender, use the HUD Lender List Search.

Adjustable-rate loans are changing, because a widely-used interest rate index expires in June

LIBOR stands for London Interbank Offered Rate and is an index of interest rates commonly used in Home Equity Conversion Mortgages (HECMs). LIBOR expires on June 30, 2023, as part of a transition that has been planned for several years. Adjustable-rate HECMs based on LIBOR must change to a replacement index selected by the Secretary of HUD.

On May 2, 2023, FHA announced that the Secretary has selected the Chicago Mercantile Exchange (CME) Term Secured Overnight Financing Rate (SOFR) index to replace LIBOR. The CME Term SOFR index was selected because it is comparable to the LIBOR index and will minimize disruption to borrowers from this transition.

The CME Term SOFR index can be found on the website of FTSE Russell, the company publishing the index.

You will receive notices from your lender about any change to your interest rate. No action is required from borrowers, but if you have questions or concerns about the changes, contact your lender or servicer. You can also contact the FHA Resource Center for assistance at (800) CALL-FHA (1-800-225-5342). Persons with hearing or speech impairments may access this number via TTY by calling the Federal Information Relay Service at (800) 877-8339. You may also submit your question(s) to the FHA Resource Center by email at: answers@hud.gov or you may also visit our online Knowledge Base at: www.hud.gov/answers, which is available 24 hours a day/7 days a week.

Online Answers 24/7

Have a question about an FHA policy, program, or technology? FHA's online, searchable Frequently Asked Questions site is available 24/7 to assist you.

Click here to access the online FAQ site.

Reverse Mortgage Consumer Information

• HUD's Seniors page

• Inheriting a Home Secured by an FHA-insured Home Equity Conversion Mortgage (Fact Sheet)

Housing Counselor Information

• Counseling: Avoid Reverse Mortgage Missteps

What is negative amortization?

Amortization means paying off a loan with regular payments, so that the amount you owe goes down with each payment. Negative amortization means that even when you pay, the amount you owe will still go up because you are not paying enough to cover the interest. 

Your lender may offer you the choice to make a minimum payment that doesn’t cover the interest you owe. The unpaid interest gets added to the amount you borrowed, and the amount you owe increases.

Usually, after a period of time, you will have to start making payments to cover principal and interest. These payments will be higher. A negative amortization loan can be risky because you can end up owing more on your mortgage than your home is worth. That makes it harder to sell your house because the sales price won’t be enough to pay what you owe. This can put you at risk of foreclosure if you run into trouble making your mortgage payments.

Tip: Try to avoid paying interest on interest.

Certain loans have payment options that let you pay only a portion of the amount of interest you owe each month. If you only pay some of the interest, the amount that you do not pay may get added to your principal balance. Then you end up paying not only interest on the money you borrowed, but interest on the interest you are being charged for the money you borrowed. This dramatically increases the amount of debt you have and the cost of the loan. To keep your debt from growing, try to pay down all of the interest and at least some of the principal you owe.