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Q&A: What are eligibility requirements for a reverse mortgage?

Lydia Palmin
by Lydia Palmin, The Garrett Network  (@BhutaniPalmin)

The Home Equity Conversion Mortgage (HECM) is FHA's reverse mortgage program.

There are a number of requirements for eligibility:

• All owners must be at least age 62.

• The amount that can be borrowed against the value of the home is generally much lower for a reverse mortgage than for a traditional mortgage, so existing mortgages should be small. They must be paid off by the new reverse mortgage.

• Borrowers must live in the home as a primary residence, or must make it their primary residence within 60 days. (This means you can use a reverse mortgage to buy a new home, not just refinance the one you're living in now.)

READ: New angles on reverse mortgages

• Single-family homes are eligible for reverse mortgages, as are 2-to-4 unit properties if one of the units is owner-occupied. HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible.

• Borrowers must meet with a HECM counselor and review alternatives to a reverse mortgage, and discuss the financial impact of the mortgage on the borrowers, the estate left to heirs, and qualification for other government programs such as Medicaid and SSI.

Homeowners' insurance must be maintained, property taxes paid in a timely manner and the property must be kept in good repair.

Qualifying for a reverse mortgage is one thing; whether it's a good idea for you to get one is another question, best discussed in detail with your financial planner.


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Lydia Palmin has practiced the profession of financial planning since 1997 and co-founded Bhutani-Palmin Financial Planning, a fee-only, hourly practice, in 2006. A Certified Financial Planner practitioner, she holds an MBA from the University of Southern California and a BA from the University of California, Berkeley.