Reverse Mortgage


1. Both borrowers must be age 62 or higher.

2. They must own their home.

3. The home must be the principal residence

4. Any and all existing liens or loans must be paid with the proceeds of the reverse mortgage loan.

 
 

Definition of Reverse Mortgage

A  reverse mortgage loan allows seniors, who are 62 and older, to unlock a portion of the equity in their home. There is no required monthly payment during the life of the loan. The loan is repaid when the last surviving borrower dies, moves away, or is no longer the principal resident in the home.

FHA Reverse Mortgage Directory

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FHA Reverse Mortgage Loan for Seniors

The FHA reverse mortgage loan is for senior homeowners age 62 and older.   It allows them to convert the equity in their homes into monthly streams of income, a line of credit, or cash.  The FHA reverse mortgage loan must be repaid when they no longer occupy the home.  Homeowners are required to receive FHA reverse mortgage loan counseling and consumer education by an approved  FHA reverse mortgage loan counselor so they can confirm that this fha reverse mortgage loan program meets their needs and has the value that they are looking for.

A certified HECM FHA reverse mortgage loan counselor will discuss program eligibility, considerations and alternatives to obtaining a HECM FHA reverse mortgage loan.   Upon the completion of FHA reverse mortgage counseling, a senior homeowner and their family should be able to make an informed decision of whether the reverse mortgage will meet there needs.

Homeowners who qualify for an FHA reverse mortgage loan can complete a reverse mortgage application by contacting a FHA-approved reverse mortgage lending institution.  If you need assistance locating a FHA-approved lender, you may request a list from a reverse mortgage counselor.


FHA Reverse Mortgage Loan Requirements:

  • Must own your property
  • Must be age 62 years of age or older
  • Live in your property as primary residence
  • Participation in a consumer information session given by a HUD-approved housing counseling agency.
    What a Senior Can Borrow is Based On:
  • Age of the youngest borrower if more than one
  • Lesser of appraised value or the FHA insurance limit
    •
  • Current interest rate
              FHA Reverse Mortgage Financial Requirements
  • No income or credit qualifications are required of the borrower
  • Closing costs may be financed in the mortgage
    Property Requirements:
  • Meet FHA property standards and flood requirements
  • Single family home or 1-4 unit home with one unit occupied by the borrower (which can also be FHA-approved condominiums or manufactured homes and leased land)

How FHA Reverse Mortgage Loan Program Works

Senior Homeowners 62 and older, who have little or no mortgage balances remaining, and are currently living in the home are eligible to participate in the FHA reverse mortgage loan program. With the FHA reverse mortgage loan, seniors are allowed to borrow against the equity in their homes. Seniors can select from five payment plans:

  • Line of Credit - unscheduled payments or in installments, at times and amounts of your choosing until the line of credit is exhausted is a popular FHA reverse mortgage loan option.
  • Tenure - equal monthly payments as long as at least one borrower lives and continues to occupy the property as a principal residence.
  • Term - equal monthly payments for a fixed number of months selected.
  • Modified Tenure - combination of line of credit and monthly payments for as long as the borrower remains in the home.
  • Modified Term - combination of line of credit and monthly payments for a fixed period of months which you choose

Seniors who already have a FHA reverse mortgage loan, and whose circumstances change, may be able to restructure their payment options.

Unlike traditional home equity loans, an FHA reverse mortgage loan does not require repayment as long as the senior lives there.   FHA reverse mortgage lenders recover their principal, plus interest, when the home is sold. The home equity remaining after sale goes to the homeowner, estate or heirs. 

Since the FHA reverse mortgage loan program is in fact FHA insured, you can never owe more than your home's value.  If the home is sold and proceeds are insufficient to pay the amount owed, HUD will pay the lender the amount of the shortfall. HUD's Federal Housing Administration (FHA)  provides this coverage and collects an insurance premium from all borrowers.

The amount a homeowner can borrow depends on the age of the youngest borrower, the current interest rate, the appraised value of the home or the FHA's mortgage limits for the area, whichever is less.  The older you are, and the lower the interest, the more you can borrow with an fha reverse mortgage loan.

There are no asset or income requirements on borrowers receiving an FHA reverse mortgage loan.

There are also no requirements on the value of homes qualifying for an FHA reverse mortgage loan. The value of the home will be determined by an appraisal. However, the amount that may be borrowed is derived from the lower of the appraisal amount or FHA mortgage limit for the area.  FHA lending limits vary from $200,160 to $362,790.

In Alaska, Guam, Hawaii and the Virgin Islands, the FHA reverse mortgage loan limits may be adjusted to 150% of the lending limit ceiling depending on the area. The FHA limits usually increase yearly.





 


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