Quick answer
A reverse mortgage is a loan against your home equity that you don’t repay month by month: interest and fees are added to the balance, and the loan comes due when the last borrower dies, sells the home or no longer lives there. Most are Home Equity Conversion Mortgages (HECMs), insured by FHA and open to borrowers aged 62 years or older.
Key facts
What you still have to pay
No loan payment doesn’t mean no costs. You must keep paying property taxes and homeowners insurance, maintain the home and live in it as your main residence; falling behind can make the loan due and lead to foreclosure. Before applying for a HECM you must meet a HUD-approved counselor.
What a HECM costs
The FHA premiums are an initial 2% of the maximum claim amount — the home’s value up to the $1,249,125 limit — plus 0.5% a year on the balance. On a $400,000 home that’s $8,000 at closing; on a $150,000 balance, about $750 a year added to the loan. Origination fees and other closing costs come on top. Because a HECM is non-recourse, you or your heirs never owe more than the home is worth: if the balance is higher, heirs can settle by selling for at least 95% of the appraised value. The reverse mortgages guide covers payout options.
Related terms
Sources
- HUD Mortgagee Letter 2017-12 — HECM initial mortgage insurance premium (share of maximum claim amount); HECM annual mortgage insurance premium (share of balance) (Oct 2, 2017)
- 24 CFR 206.33 — HECM reverse mortgage: youngest borrower must be at least (Oct 7, 2026)
- HUD Mortgagee Letter 2025-22 — 2026 HECM maximum claim amount (2026 limit)
- CFPB — Heirs can settle a HECM larger than the home’s value by selling for at least this share of the appraised value (Aug 28, 2026)
- CFPB: What is a reverse mortgage?
- HUD: FHA reverse mortgage for seniors (HECM)
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.