A reverse mortgage is a special type of home loan available to homeowners 62 years or older that allows them to convert part of their home’s equity into cash without making monthly mortgage payments. Instead of the borrower paying the lender each month, the lender pays the homeowner. The loan is repaid later – usually when the borrower sells the home, moves out, or passes away.

The most common type is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA).

How a Reverse Mortgage Works

• The homeowner keeps the title to the home.
• They receive funds as a lump sum, monthly payment, line of credit, or a combination.
• No monthly mortgage payments are required.
• Interest is added to the loan balance each month.
• The loan becomes due only when the home is sold or the borrower no longer lives in the property as a primary residence.