A HUD reverse mortgage (also known as an FHA reverse mortgage, HECM or Home Equity Conversion Mortgage) carries certain requirements for eligibility. The HUD reverse mortgage guidelines state that borrowers must:
- Be 62 years of age or older (borrower may have a non-borrowing spouse)
- Own the property outright or paid-down a considerable amount
- Occupy the property as your principal residence
- Not be delinquent on any federal debt
- Have financial resources to continue to make timely payment of property taxes, insurance, Homeowner Association fees, etc.
- Participate in a consumer information session given by a HUD-approved HECM counselor
In the HUD reverse mortgage program, the homeowner’s property must meet all FHA property standards and flood requirements. FHA reverse mortgage lenders will consider the following property types for FHA reverse mortgage approval:
- Single family home or 2-4 unit home with one unit occupied by the borrower
- HUD-approved condominium project
- Manufactured home that meets FHA requirements
In addition, FHA reverse mortgage guidelines require that income, assets, monthly living expenses, and credit history be verified, as well as the timely payment of real estate taxes, hazard and flood insurance premiums.
An FHA reverse mortgage calculator or quote from a lender who handles HUD reverse mortgages can help you understand how much you can borrow and how your interest rate will affect the overall cost of the loan.
FHA reverse mortgages are government-insured, non-recourse loans, meaning there is insurance in place in case the total loan amount is greater than the amount for which the property eventually gets sold. An HECM borrower is not responsible for that difference, should it arise.