Reverse mortgages and HECM.

What a reverse mortgage is

On an ordinary mortgage you send money to the lender and your balance falls. A reverse mortgage runs the other direction: the lender advances money to you against the equity in your home, and the balance grows over time as interest and fees are added to it. Nothing is repaid until a maturity event — you sell, you move out permanently, or the last borrower dies.

You keep the title. The lender does not own your house, and that misunderstanding is the single most common one people arrive with.

HECM and reverse mortgage — the difference

A Home Equity Conversion Mortgage is a reverse mortgage insured by the Federal Housing Administration. Every HECM is a reverse mortgage; not every reverse mortgage is a HECM. The rest are proprietary products written by individual lenders, generally aimed at higher-value homes that exceed the FHA limit.

The distinction matters because the federal consumer protections — the counseling requirement, the non-recourse guarantee, the FHA insurance behind them — attach to the HECM. A proprietary product may or may not carry equivalents, and you should ask directly rather than assume.

Who is eligible

• Age 62 or older. That is the federal floor for a HECM. Some proprietary programs start at 60 in certain states.
• The home is your principal residence, and it stays that way for the life of the loan.
• Substantial equity, and any existing mortgage is paid off at closing, usually out of the reverse mortgage proceeds themselves.
• A financial assessment confirming you can keep up taxes, insurance and upkeep.
• Independent counseling with a HUD-approved counselor, completed before an application can proceed. This is required, it is not a formality, and no lender can waive it.

How the money reaches you

A HECM can be taken as a lump sum at closing, as fixed monthly advances, as a line of credit you draw on when you choose, or as a combination. The choice is consequential — it changes how fast the balance grows and how much flexibility you keep — and it is one of the main things counseling exists to walk you through.

What you are still responsible for

“No monthly mortgage payment” is not the same as no obligations. You remain responsible for:

• Property taxes
• Homeowner’s and any required hazard or flood insurance
• Homeowners association or condominium dues
• Keeping the property maintained and in good repair
• Living there as your principal residence

Fall behind on any of these and the loan can become due and payable. Foreclosures on reverse mortgages happen, and when they do it is almost always taxes and insurance rather than anything exotic. Anyone who describes this product to you without saying so plainly is not being straight with you.

What happens at the end

When the last borrower sells, moves out permanently, or dies, the loan comes due. The house is normally sold and the balance repaid from the proceeds. Anything left over belongs to you or to your heirs.

A HECM is non-recourse. If the balance ends up larger than the home is worth, neither you nor your estate owes the difference — FHA insurance covers it. Heirs who want to keep the house can repay the balance or refinance it, and they get a defined window from HUD in which to decide.

The honest case, and the honest case against

Questions people ask

Does the bank take my house?

No. You keep the title and you remain the owner. The lender holds a lien, exactly as with any other mortgage.

Can I leave my home to my children?

Yes. Your heirs inherit the house along with the loan against it, and they can repay the balance, refinance it, or sell and keep whatever equity remains. What they inherit is smaller than it would have been, which is the real trade and worth discussing with them before you sign rather than after.

Could I owe more than the house is worth?

Not on a HECM. It is a non-recourse loan and FHA insurance absorbs any shortfall. Confirm the same protection exists before signing any proprietary reverse mortgage.

Is the money taxable?

Loan proceeds are generally not treated as income, but a reverse mortgage can interact with needs-based benefits such as Medicaid and Supplemental Security Income. We are not tax advisors — take this one to yours.

Do I have to do the counseling?

Yes, with a HUD-approved counselor independent of any lender, and it happens before an application can move forward. HUD keeps the roster of approved counselors and you can choose your own.

My spouse is under 62. What then?

There are non-borrowing spouse protections that can allow them to remain in the home after the borrowing spouse dies, and the rules are specific and have changed over the years. Raise it at the very first conversation — it shapes the whole structure of the loan.

This page is educational and is not an offer to lend, a commitment to lend, or advice about your situation. A reverse mortgage is a significant decision affecting your home and your estate. Speak with a HUD-approved counselor, and with your own tax and legal advisors, before proceeding. Availability varies by state and by program.