What Is a Reverse Mortgage?
A reverse mortgage is a loan secured by the home that allows an eligible homeowner to access equity without a required monthly principal and interest payment, as long as loan obligations continue to be met.
Before you decide
- The homeowner still owns the home.
- The loan balance generally grows over time if payments are not made.
- Borrowers must keep property taxes, insurance, maintenance, and occupancy current.
Plain-English Definition
A reverse mortgage changes how home equity is used. Instead of making a required monthly principal and interest payment like a traditional mortgage, the borrower may receive proceeds or use proceeds to pay off an existing mortgage. Interest and fees are added according to the loan terms.
What It Does Not Mean
It does not mean the lender owns the home. It does not remove the borrower responsibility for taxes, insurance, property condition, association dues when applicable, or occupancy. It also does not remove the need for family and advisor discussions when heirs, benefits, taxes, or long-term care planning are involved.
Why Borrowers Compare It
Borrowers usually compare it when the existing mortgage payment is a strain, when home equity is meaningful but monthly income is tight, or when moving is not the preferred option.
Common Questions
Can a reverse mortgage pay off my existing mortgage?
A reverse mortgage may pay off an existing mortgage at closing if the homeowner qualifies and available proceeds are sufficient after program calculations, liens, and costs.
Do I still own my home with a reverse mortgage?
The homeowner keeps title to the home, but the reverse mortgage is a loan secured by the property and the borrower must keep meeting loan obligations.
When should a homeowner avoid a reverse mortgage?
A reverse mortgage may not fit if the homeowner expects to move soon, cannot keep taxes and insurance current, cannot maintain the home, or has better alternatives after reviewing the full household plan.
Keep reading
A HECM is the FHA-insured reverse mortgage program for eligible homeowners and requires HUD-approved reverse mortgage counseling before closing.
Reverse Mortgage RequirementsReverse mortgage approval depends on age, living in the home, property type, equity, counseling, financial review, and the homeowner's ability to keep loan obligations current.
Reverse Mortgage CostsReverse mortgage costs can include origination, mortgage insurance for HECM loans, third-party closing costs, servicing-related costs, and interest according to the loan terms.
Where this information comes from
U.S. Department of Housing and Urban Development - official
https://www.hud.gov/program_offices/housing/sfh/hecmConsumer Financial Protection Bureau - regulator
https://www.consumerfinance.gov/consumer-tools/reverse-mortgages/Federal Trade Commission - regulator
https://consumer.ftc.gov/articles/reverse-mortgagesReviewed by Nick Cunningham, NMLS #907393. Last reviewed 2026-06-07.
Educational information only. Not personal financial, legal, tax, or benefits advice.