Reverse Mortgages Explained: How a HECM Works for Homeowners 62+
A reverse mortgage, most commonly structured as a Home Equity Conversion Mortgage (HECM) and insured by the FHA, allows homeowners aged 62 and older to convert home equity into cash — as a lump sum, monthly payments, or a line of credit — without making monthly mortgage payments during the life of the loan. How a reverse mortgage differs from a traditional mortgage With a traditional mortgage, the borrower makes payments that reduce the loan balance over time. With a reverse mortgage, the loan balance generally increases over time, as interest and fees accrue without regular payments being made — the opposite direction from a traditional amortization schedule. The loan becomes due when the borrower sells the home, moves out permanently, or passes away. Who qualifies Eligibility generally requires being at least 62 years old, owning the home outright or having significant equity, occupying the home as a primary residence, and meeting financial assessment requirements demonstrati...