# Reverse mortgages explained

> How a HECM reverse mortgage works: the age 62 rule, 2026 limit, insurance and fees, required counseling, what you must keep paying, and spouses and heirs.

URL: https://mortgage-math-us.com/loan-types/reverse-mortgages/  
Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team

## Quick answer

A reverse mortgage lets homeowners borrow against their home’s equity without making monthly loan payments; the balance, with interest and fees, is repaid when the last borrower sells, moves out or dies. The FHA-insured Home Equity Conversion Mortgage (HECM) is the most common type: the youngest borrower must be at least 62, the 2026 lending limit is $1,249,125, and you pay an initial mortgage insurance premium of 2% plus 0.5% a year. Counseling with a HUD-approved counselor is required first, and you must keep paying property taxes, insurance and upkeep.

## Key facts

| Fact | Value | Source | As of |
|---|---|---|---|
| Youngest borrower must be at least | 62 years | [24 CFR 206.33](https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206/subpart-B) | Oct 7, 2026 |
| 2026 HECM limit (maximum claim amount) | $1,249,125 | [HUD Mortgagee Letter 2025-22](https://www.hud.gov/sites/dfiles/hudclips/documents/2025-22hsgml.pdf) | 2026 limit |
| Initial mortgage insurance premium | 2% | [HUD Mortgagee Letter 2017-12](https://www.hud.gov/sites/documents/17-12ml.pdf) | Oct 2, 2017 |
| Annual mortgage insurance premium | 0.5% | [HUD Mortgagee Letter 2017-12](https://www.hud.gov/sites/documents/17-12ml.pdf) | Oct 2, 2017 |
| Origination fee cap | $6,000 | [24 CFR 206.31](https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206/subpart-B) | Oct 7, 2026 |
| HUD housing counseling referral line | 800-569-4287 | [HUD](https://www.hud.gov/stat/sfh/housing-counseling) | Oct 28, 2026 |

## How a reverse mortgage works

With a regular mortgage you pay the lender every month and the balance shrinks. A reverse mortgage runs the other way: the lender pays you — as a lump sum, monthly payments or a line of credit — and interest, mortgage insurance and fees are added to the balance, so the amount you owe goes **up** over time. You keep the title to your home.

You don’t make monthly loan payments, but the loan becomes due when the last borrower dies, sells the home or no longer lives there as a principal residence — including when no borrower has lived there for more than 12 months in a row because of illness. It can also become due earlier if you don’t pay property taxes or insurance or don’t maintain the home.

Most reverse mortgages are **HECMs**, insured by the FHA — the same agency behind [FHA purchase loans](https://mortgage-math-us.com/loan-types/fha-loans/). Private “proprietary” reverse mortgages exist for higher-value homes but follow lenders’ own rules; this guide covers HECMs.

## Who qualifies for a HECM

- **Age:** the youngest borrower must be 62 or older at closing.
- **Equity:** you own the home outright or have a low enough mortgage balance for the reverse mortgage to pay it off.
- **Occupancy:** the home is your principal residence, where you live most of the year.
- **No federal debt:** you can’t be delinquent on federal debts such as income taxes or federal student loans.
- **Money for ongoing costs:** the lender checks that you can keep paying taxes, insurance and other property charges — or sets aside part of the loan to pay them.
- **Counseling:** you must meet with a HUD-approved HECM counselor before you apply.
- **Property:** a home that meets FHA property standards and flood requirements.

## How much you can get and how it’s paid

The amount available, called the principal limit, depends on the age of the youngest borrower or eligible non-borrowing spouse, the interest rate and the home’s value, capped at $1,249,125 in 2026. Older borrowers and lower rates mean more money. You won’t get the full value of the home.

| Payment plan | Rate type | How it works |
|---|---|---|
| Lump sum | Fixed | All available funds at closing; interest accrues on the full amount from day one |
| Term | Adjustable | Equal monthly payments for a set number of years |
| Tenure | Adjustable | Monthly payments for as long as you keep the loan and live in the home |
| Line of credit | Adjustable | Draw when you need it; unused credit can grow |

Line-of-credit and monthly plans can be combined.

## What a HECM costs

Three charges are set by HUD rules. The **initial MIP** is 2% of the maximum claim amount — the lower of the home’s appraised value, the sale price on a purchase and the $1,249,125 limit. The **annual MIP** is 0.5% of the balance, added each month. The **origination fee** can be the greater of $2,500 or 2% of the first $200,000 of the maximum claim amount plus 1% of the rest, but never more than $6,000. Appraisal, title, recording and other [closing costs](https://mortgage-math-us.com/buying/closing-costs/) come on top, and lenders may charge a monthly servicing fee. All of these can be financed — which means they grow with interest.

> **Worked example: HUD’s maximum upfront charges at three home values**
>
> | Home value | Maximum claim amount | Initial MIP (2%) | Maximum origination fee | Total |
> |---|---:|---:|---:|---:|
> | $360,000 | $360,000 | $7,200 | $5,600 | $12,800 |
> | $700,000 | $700,000 | $14,000 | $6,000 | $20,000 |
> | $1,500,000 | $1,249,125 | $24,983 | $6,000 | $30,983 |
> 
> Third-party closing costs and servicing fees are extra. The first row is near the US median home value.

## How the balance grows

Because nothing is repaid, interest compounds. Suppose you draw $100,000 at closing and the loan’s rate equals the 30-year fixed average of 7.24% — an example only, since reverse mortgage rates are set differently — plus the 0.5% annual MIP. The balance would reach about $147,073 after 5 years, $216,304 after 10 and $318,124 after 15.

That growth eats into the equity left for you or your heirs. A HECM is still **non-recourse** in practice: if the loan ends up larger than the home’s value, heirs can settle it by selling for at least 95% of the appraised value, and FHA mortgage insurance covers the rest.

## What stays your responsibility

> **Rule: You still own the home — and its costs**
>
> You must keep paying property taxes, homeowners insurance (and flood insurance if required), HOA or condo dues, and keep the home in good repair. Falling behind on any of these can make the loan due and lead to foreclosure, even though you owe no monthly loan payment.

Budget for these costs before you decide how much to draw, and ask about a set-aside if your income is tight.

## Spouses and heirs

If your spouse isn’t a co-borrower — often because they’re under 62 — HUD rules may let an **eligible non-borrowing spouse** stay in the home after you die or move into long-term care, as long as conditions are met, including keeping it as their principal residence and having a legal right to remain. They can’t draw more money, and they must also receive counseling before the loan closes. Talk through this at counseling, because it affects how much you can borrow.

When the loan comes due, heirs can keep the home by paying the balance (often with a new loan), sell it, or hand it to the lender. After the due-and-payable notice they generally have 30 days to act, and the lender may extend that to give them time to sell or arrange financing.

## Counseling comes first

**How to get a HECM**

1. **Talk to a HUD-approved counselor** — Required before you apply. Call HUD’s referral line at 800-569-4287 or search HUD’s list of approved agencies.
2. **Compare lenders** — Ask each for the rate, origination fee and closing costs, and compare total costs, not just the cash you receive.
3. **Apply and complete the financial assessment** — The lender checks credit and income to make sure you can cover taxes and insurance.
4. **Appraisal** — Sets the home’s value and checks FHA property standards; repairs may be required.
5. **Close** — After closing on a HECM for a home you already own, you generally have 3 business days to cancel.

## Alternatives to compare

A reverse mortgage is one way to use home equity. A [HELOC](https://mortgage-math-us.com/home-equity/heloc/) or [home equity loan](https://mortgage-math-us.com/home-equity/home-equity-loan/) costs less up front but requires monthly payments; downsizing frees cash without debt. Weigh them in [reverse mortgage pros and cons](https://mortgage-math-us.com/blog/reverse-mortgage-pros-and-cons/) and [the risks of borrowing against your home](https://mortgage-math-us.com/home-equity/home-equity-risks/).

## Frequently asked questions

### How old do you have to be for a reverse mortgage?

For a HECM, the youngest borrower must be at least 62 at closing. A younger spouse can be an eligible non-borrowing spouse in some cases.

### How much does a reverse mortgage cost?

An initial MIP of 2% of the maximum claim amount, an annual MIP of 0.5% of the balance, an origination fee capped at $6,000, plus closing costs and interest. On a $360,000 home, the MIP and maximum origination fee alone come to $12,800.

### Do you have to pay anything each month on a reverse mortgage?

No loan payment is required, but you must keep paying property taxes, homeowners insurance, HOA dues and upkeep. Missing them can make the loan come due.

### What happens to a reverse mortgage when the borrower dies?

The loan becomes due. Heirs can repay it to keep the home, sell the home, or turn it over to the lender. If the balance exceeds the value, selling for at least 95% of the appraised value settles it.

### Is reverse mortgage counseling required?

Yes. You, and any non-borrowing spouse, must meet with a HUD-approved HECM counselor before applying. HUD’s referral line is 800-569-4287.

### What is the HECM limit for 2026?

$1,249,125. It caps the home value used to work out how much you can borrow, not the price of homes that qualify.

### Can you lose your home with a reverse mortgage?

Yes, if you stop living there as your principal residence, fail to pay property taxes or insurance, or let the home fall into disrepair. Staying current on those obligations is the key protection.

## Sources

- [HUD Mortgagee Letter 2025-22](https://www.hud.gov/sites/dfiles/hudclips/documents/2025-22hsgml.pdf) — 2026 HECM maximum claim amount (2026 limit)
- [HUD Mortgagee Letter 2017-12](https://www.hud.gov/sites/documents/17-12ml.pdf) — HECM initial mortgage insurance premium (share of maximum claim amount); HECM annual mortgage insurance premium (share of balance) (Oct 2, 2017)
- [24 CFR 206.31](https://www.ecfr.gov/current/title-24/subtitle-B/chapter-II/subchapter-B/part-206/subpart-B) — HECM origination fee: lenders may always charge up to; HECM origination fee cap; HECM origination fee: share of the first $200,000 of the maximum claim amount (Oct 7, 2026)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year)
- [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026)
- [CFPB](https://www.consumerfinance.gov/ask-cfpb/will-my-children-be-able-to-keep-my-home-after-i-die-if-i-have-a-reverse-mortgage-loan-en-242/) — Heirs can settle a HECM larger than the home’s value by selling for at least this share of the appraised value; Heirs have this long after a HECM due-and-payable notice to buy, sell or turn over the home (Aug 28, 2026)
- [HUD](https://www.hud.gov/stat/sfh/housing-counseling) — HUD housing counseling referral line (Oct 28, 2026)
- [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home (Aug 8, 2024)
- [CFPB: What is a reverse mortgage?](https://www.consumerfinance.gov/ask-cfpb/what-is-a-reverse-mortgage-en-224/)
- [CFPB: Can anyone take out a reverse mortgage loan?](https://www.consumerfinance.gov/ask-cfpb/can-anyone-take-out-a-reverse-mortgage-loan-en-227/)
- [HUD: FHA reverse mortgage for seniors (HECM)](https://www.hud.gov/hud-partners/single-family-hecmhome)
- [CFPB: Reverse mortgage key terms](https://www.consumerfinance.gov/consumer-tools/reverse-mortgages/answers/key-terms/)

_General information, not financial advice._