What are the requirements and rules for a reverse mortgage?

Similar to getting other loans, there are requirements and rules that borrowers looking to get a reverse mortgage will have to meet.

Understanding the requirements and rules can help you figure out if you qualify for a reverse mortgage or allow you to be prepared when the time comes for a reverse mortgage. These rules and requirements can vary between proprietary reverse mortgages and federally insured reverse mortgages, like a home equity conversion mortgage, or HECM.

If you are ready for a reverse mortgage, you can start by completing a reverse mortgage application.

If you are looking to get a reverse mortgage, you and your property will have to meet certain requirements. Here are a few of the requirements you will need to meet when qualifying for a reverse mortgage.

These requirements could vary slightly depending on your lender or the type of reverse mortgage you get.

Reverse mortgages are available for borrowers starting at age 55. However, if you are looking to get a federally insured reverse mortgage, like a HECM, you will have to be at least 62.

If you are married but your partner is under the required age, you can still get a reverse mortgage, but your partner will not have access to the funds as they will be designated as non-borrowing. A non-borrower can stay in the home should anything happen to the borrower.

While there are minimum age requirements for a reverse mortgage, there is no maximum age for a reverse mortgage.

With a reverse mortgage, homeowners still must pay property tax and homeowners insurance, as well as maintain the property. To ensure that these bills will be taken care of, some of your funds may be put into a Life Expectancy Set-Aside, or LESA. A LESA works similar to an escrow account.

For a HECM, you will be required to attend counseling approved by HUD. The goal is to help you understand your reverse mortgage.

When getting a reverse mortgage, there are a few other requirements that you and your home will have to meet.

These requirements include:

• Your home must be your primary residence.
• You must own the home you are getting a reverse mortgage on.
• Typically, you will have to own at least 50% equity in your home.
• Multiunit homes could be eligible if you live in one of the units.
• For a HECM, your property must meet FHA requirements.*

For a reverse mortgage, lenders will look for you to have a substantial amount of equity in your home, typically 50% equity. Essentially, you could get a reverse mortgage while you still have a traditional mortgage on your home.

Home equity is calculated by subtracting any remaining mortgage balance from your home’s total value. Take that number and then divide it by your home’s total value. Multiple that final number by 100 to get the percentage.

While there are requirements you will have to meet for a proprietary reverse mortgage, there isn’t a debt-to-income (DTI) ratio requirement. The same is true for a HECM.

Because borrowers with a reverse mortgage do not need to make monthly payments, your income compared to current debts is not as relevant. Equity and funds to pay property bills are what lenders tend to focus on instead.

If you are looking to start the process of getting a reverse mortgage, you can begin with an application today.

During your application you will be connected with a Loan Officer who can help you along the application process and answer any questions you may have. Before applying, it is a good idea to find out which reverse mortgage works best for you and check your lender’s qualifications to make sure you qualify.

Begin accessing your home’s value without having to worry about repayment when you apply for a reverse mortgage.

*Rate is an FHA Approved Lending Institution.

This is not a commitment to lend. Home Equity Conversion Mortgages (HECMs) are eligible for borrowers 62 and older. Borrower must pay property taxes, Homeowner’s insurance, HOA dues (as applicable), and maintain the home and using it as primary residence or the loan will need to be repaid. Otherwise, the loan must be repaid when the borrowers leave the home more than 12 consecutive months, transfer their property's title to another person, the last borrower passes away or sells the home. Prices, guidelines and minimum requirements are subject to change without notice. Subject to review of credit and/or collateral; not all applicants will qualify for financing. It is important to make an informed decision when selecting and using a loan product; make sure to compare loan types when making a financing decision. This material has not been reviewed, approved or issued by HUD, FHA or any government agency. Rate is not affiliated with or acting on behalf of or at the direction of HUD, FHA or any other government agency. To find a Reverse Mortgage counselor near you, search the HECM Counselor Roster at https://entp.hud.gov/idapp/html/hecm_agency_look.cfm or call (800) 569-4287.