FAQs
HECM Benefits & Limitations
Find clear, straightforward answers to your clients’ most common Reverse Mortgage questions right here.
What exactly is a Home Equity Conversion Mortgage (HECM)?
A HECM is a government-insured reverse mortgage that lets seniors convert home equity into cash without monthly payments.
Who can benefit from a reverse mortgage?
Seniors benefit from access to equity without monthly payments. Seniors’ families benefit because their parent(s) can remain financially independent. Financial professionals can benefit by incorporating discussions of reverse mortgage pros and cons into their practices to provide holistic solutions for their clients, increasing their clients’ trust.
Who qualifies for a reverse mortgage?
To qualify for a reverse mortgage, the borrower must be at least 62 years old, own the home outright or have significant equity in it (typically 50% to 60%), and live in the home at last 6 months plus one day cumulatively per year. Eligible properties typically include single-family homes, certain condominiums, townhomes, and some manufactured homes that meet program requirements (ex. not on rental pads).
How does a reverse mortgage affect heirs?
First of all, reverse mortgages are non-recourse loans, meaning the lender cannot seek payment from the borrower or their heirs beyond the value of the home when the loan is repaid. When a reverse mortgage borrower passes away or permanently leaves the home, the loan becomes due. Heirs may choose to repay the loan balance (typically by selling the home or refinancing the debt) or, if the home’s value is less than the outstanding balance, they can settle the debt for 95% of the appraised value of the property. If heirs decide not to keep the home, they can sell it within 6-12 months of the borrower’s death to recover the amount owed and keep the remaining proceeds from the sale.
How much money can seniors get from a reverse mortgage?
A senior’s maximum available loan from a reverse mortgage in 2025 is based on the age of the youngest borrower, current interest rates, and the home’s appraised value, which is capped at the FHA HECM limit of $1,209,750. Typically, eligible borrowers can access about 35% to 60% of their home equity, with older borrowers qualifying for higher percentages.