What every REALTOR needs to know to keep the conversation moving

You find yourself across from a senior couple who wants to downsize. They love the idea of moving closer to their grandkids. They get excited about a smaller, easier-to-manage home. Then you mention the HECM for Purchase, and the mood changes. One of the seniors asks the question that could stop the conversation cold: “Wait. Does that mean our kids will be stuck paying our debt when we die?” Concerns about reverse mortgage inheritance come from a real place of love. Seniors do not just worry about themselves. They worry about what they might leave behind for their families.

Your job as a REALTOR is not to sell the loan. That is the lender’s job. Your job is to identify where the fear comes from and address it calmly and honestly. You help your client take the next step. That might mean connecting them with a HUD-approved HECM counselor or a reverse mortgage specialist. You don’t have to walk them through the details.

But first, you need to understand the fear and know why it is largely based on a myth.

Where Does This Fear Come From?

Reverse mortgages have a complicated history. Early versions of these loans had far fewer consumer protections than today’s federally insured reverse mortgages. The HECM or Home Equity Conversion Mortgage program is backed by the U.S. Department of Housing and Urban Development (HUD). Stories from earlier decades, combined with well-meaning but uninformed family members, can create a persistent belief that the bank takes the house and leaves the heirs holding the bag.

That reputation does not match the reality of today’s HECM program. But fears do not disappear just because the rules changed. Your senior clients may have heard cautionary tales from friends or siblings. Their adult children may have read an alarming article online. These concerns about reverse mortgage inheritance are understandable, and they deserve a thoughtful response, not dismissal.

Tip: When a senior or their family member raises this concern, resist the urge to immediately correct them. Acknowledge the concern first. Something as simple as “That is a really important question, and I am glad you asked” goes a long way before you offer any explanation.

The Myth vs. The Reality of Reverse Mortgage Inheritance

The myth sounds like this: “If my parents take out a reverse mortgage and they owe more than the house is worth when they die, the bank will come after us kids to pay off the rest.”

The reality differs greatly from this fear. A HECM is what is called a non-recourse loan. That single term carries a lot of weight, so let’s break it down in plain language.

Non-recourse means the home is the only collateral. The lender can only look to the property to satisfy the debt. They cannot pursue the borrower’s other assets during the borrower’s lifetime, and they cannot pursue the heirs personally after the borrower dies. When it comes to reverse mortgage inheritance, this protection is the most important fact your clients need to understand. If the loan balance is larger than the home’s value when it comes due, the heirs do not pay the difference. Full stop.

So where does that gap go? FHA mortgage insurance, which every HECM borrower pays into, covers the shortfall. The federal government designed the FHA insurance to do just this. It protects both the borrower and the heirs when the loan balance exceeds the home’s value at payoff.

What the Lender Does Have: A Lien

Here is where many people get confused. The HECM lender does hold a lien against the property. A lien is a legal claim that gives the lender the right to be paid first when the home is sold. This is not unique to reverse mortgages. It works exactly the same way as a traditional mortgage.

When someone takes out a conventional mortgage to buy a home, the lender places a lien on the property and gets paid when the home sells. The HECM works the same way. The lender has a claim on the property, not on the borrower’s heirs and not on anything else the family owns.

The lien does not give the lender ownership of the home. The borrower still owns the home and holds the title. The lender cannot evict the family, sell the property without cause, or make decisions about the home during the borrower’s lifetime, as long as the borrower meets the loan’s basic obligations. Those obligations include living in the home as a primary residence, keeping up with property taxes, maintaining homeowner’s insurance, and keeping the home in good repair.

The bottom line: A HECM lender has the same basic rights as any mortgage lender. They hold a lien, they get paid when the home sells, and that is where their rights end. Reverse mortgage inheritance does not include personal debt passed to heirs.

What Reverse Mortgage Inheritance Actually Looks Like for Heirs

When the last borrower passes away, the HECM loan becomes due and payable. That sounds alarming, but heirs typically have both options and time. Here is how it generally works.

The lender notifies the heirs that the loan is due. Heirs then have approximately six months to decide what to do, and they can often request extensions of up to 12 months total while they work through their options.

Those options are straightforward. If the home is worth more than the loan balance, the heirs can sell the home, pay off the loan, and keep whatever equity remains. If the home is worth less than the loan balance, FHA insurance covers the gap, and the heirs owe nothing beyond the home itself. Heirs can also refinance the HECM into a conventional mortgage if they want to keep the property. Or they can pay off the loan balance at 95 percent of the current appraised value, even if the loan balance is higher. That is another consumer protection built directly into the HECM program.

In every scenario, the heirs are not personally liable. The lender exercises its lien, the loan gets paid from the home’s proceeds, and anything remaining passes to the estate.

How Reverse Mortgage Inheritance Works with the HECM for Purchase

The HECM for Purchase adds an interesting dimension to this conversation, especially for seniors who are downsizing from a larger home they already own.

Consider this scenario. A senior homeowner sells a larger home and nets $400,000. With a conventional mortgage on a smaller new home, they might roll most of that money into the purchase and still carry a monthly mortgage payment. With a HECM for Purchase, they might put down 50 to 60 percent of the purchase price, have no required monthly mortgage payment, and walk away with $150,000 to $200,000 still in hand from the sale.

That freed-up equity does not have to sit idle:

• It might help a child make a down payment on their first home.
• It might fund a grandchild’s college education.
• Or, it might simply provide a financial cushion that gives the senior peace of mind for years to come.

Many people call this “giving while living,” and for seniors who care deeply about their families, it often matters more than the size of a future estate.

It is important to be clear about one thing: interest and mortgage insurance premiums accrue on a HECM over time, and that will reduce the equity available to heirs compared to owning the home outright. A HECM is not a wealth-building tool in the traditional sense. But used thoughtfully as part of a downsizing plan, it can free up capital that would otherwise stay locked in a larger home, giving the senior more flexibility and the family more support right now.

Important: The HECM for Purchase is the only reverse mortgage product that applies to a home purchase transaction. It is the product most relevant to your work as a REALTOR, and it is the one worth knowing well.

Practical Ways to Address the Fear with Your Clients

You do not need to be a reverse mortgage expert to help your clients move past concerns about reverse mortgage inheritance. You just need a few simple tools.

Start by normalizing the concern. When the inheritance question comes up, try something like this: “You are not the first person to ask that, and it is a smart question. Let me share what I know, and then we can connect you with a specialist who can walk you through the full picture.” That response validates the concern, gives you room to offer basic context, and sets up a referral without making you look like you are selling something.

Use the traditional mortgage comparison. Most people already understand how a regular mortgage lien works. Saying “the lender holds a lien, just like any mortgage, but your heirs are never personally on the hook for the debt” is simple and familiar. It moves the conversation from fear to understanding.

Bring in the adult children when possible. Many seniors make financial decisions as a family. If their children are involved in the home search, include them in the HECM conversation from the beginning. A concerned adult child who hears the explanation directly is far more likely to support the decision than one who only hears about it secondhand.

Refer to HUD-approved resources. Before any senior signs anything, they are required to complete a session with a HUD-approved HECM counselor. This is a federal requirement, and it is a good one. Counselors explain everything in detail, including reverse mortgage inheritance rights and protections, and help borrowers and their families ask the right questions. You can find HUD-approved counseling agencies at hud.gov.

Your Role Is to Open the Door, Not Close the Deal

REALTORs who serve senior clients well understand one thing: this population makes decisions carefully, and often with family input. A senior who feels rushed, confused, or unheard will not move forward. One who feels understood and informed will.

You do not need to have every answer. You need to know enough to keep the conversation going rather than letting a fear-based objection end it. When you can say, “I understand that concern, and here is what I know about how reverse mortgage inheritance actually works,” you build trust. When you follow that up with a warm referral to a HECM specialist or HUD-approved counselor, you demonstrate that you have your client’s best interests at heart.

REALTORs who earn a reputation for serving seniors well, and for knowing how to navigate conversations like this one, build a referral base that keeps growing. Estate planning attorneys, financial advisors, and senior care coordinators all look for real estate professionals who understand this space. Being that person starts with knowing enough to address the questions that stop other agents in their tracks.

Want to Serve Senior Clients with More Confidence?

HECMCoach.com offers educational content, professional resources, and consulting services designed specifically for real estate professionals, financial advisors, and others who serve senior homeowners. Whether you want to deepen your knowledge, prepare for conversations like this one, or add a valuable specialty to your practice, there is something here for you.

Explore available resources, including books available for individual purchase and bulk orders for associations and teams. And if you found this post helpful, share it with a colleague who works with senior clients. They will thank you for it.

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Note: This post is for educational purposes only. REALTORs should always refer clients to a HUD-approved HECM counselor and a licensed reverse mortgage professional before any decisions are made. A list of HUD-approved counseling agencies is available at hud.gov.