How Do I Qualify for a Reverse Mortgage?

To be eligible for a reverse mortgage, you must be at least 62 years old and own your home. You need sufficient equity in the home to cover any outstanding balances, and the property must be your primary residence. Additionally, all applicants must undergo a financial assessment to determine their ability and willingness to meet ongoing obligations, such as property taxes and insurance.

How Much Money Can I Receive?

The loan amount you qualify for depends on several factors, including your age at closing, the appraised value of your home, current interest rates, and any outstanding liens or mortgage balances. The amount available to you is affected by the HUD-mandated limit, which restricts borrowers from accessing more than 60% of their total available loan funds(after closing costs and fees) in the first year. The remaining funds become accessible in the second year.

HUD’s maximum first-year disbursement limit is the greater of:

• 60% of the Principal Limit (the total loan amount available over time), or

• The sum of Mandatory Obligations (such as an existing mortgage payoff, tax liens, and closing costs) plus 10% of the Principal Limit, as long as it does not exceed the total Principal Limit at closing.

How Can I Receive My Funds?

There are multiple payout options:

• Lump sum (subject to HUD’s first-year withdrawal limit*)

• Line of credit

• Monthly payments

• A combination of the above

*Fixed-rate reverse mortgages only allow for a single lump sum disbursement.

What Are the Costs Associated with a Reverse Mortgage?

Reverse mortgage fees include:

• Origination fee (paid to the lender)

• Mortgage Insurance Premium (MIP) (paid to FHA for HECM loans)

• Appraisal fee

• Flood certification fee

• Document preparation fees

• Title, settlement, and escrow fees

These costs are clearly outlined in the Good Faith Estimate (GFE) provided by your lender. Some reverse mortgages may also have monthly servicing fees.

What Are the FHA Mortgage Insurance Premium (MIP) Charges?

These FHA requires both an upfront and an ongoing Mortgage Insurance Premium (MIP) to protect borrowers and lenders. The upfront MIP is based on the home's appraised value or the national HECM limit of $1,209,750 (for 2025). Ongoing MIP is calculated based on the outstanding loan balance and is added to the loan over time.

Is Counseling Required Before Getting a Reverse Mortgage?

Yes, all borrowers must complete HUD-approved counseling with an independent third party. This ensures you fully understand the loan terms before proceeding. Your lender must receive your counseling certificate before your loan can close. Contact your Mortgage Loan Originator or local HUD office to find a counselor.

Will I Have to Pay Taxes on My Reverse Mortgage Proceeds?

Reverse mortgage proceeds are typically not considered taxable income, but it’s always best to consult a tax professional to confirm your specific situation.

Are There Ongoing Fees Paid to the Lender?

Reverse mortgages are designed to minimize upfront and ongoing costs for borrowers. However, typical upfront costs include:

• Appraisal fee

• HUD-approved counseling fee (some agencies may waive this)

Some loans may have a monthly servicing fee, which is added to the loan balance. Speak with your Mortgage Loan Originator for details on service set-asides.

These FAQs are not provided or endorsed by HUD, FHA, or any federal government agency.

Additional Resources

AARP Reverse Mortgage Information: 1-800-209-8085

Consumer Financial Protection Bureau (CFPB) Lookup: www.nmlsconsumeraccess.org

HUD Housing Counseling Clearinghouse: 1-800-569-4287

Eldercare Locator (Local Resources for Seniors): www.eldercare.gov | 1-800-677-1116

Federal Trade Commission (FTC) - Report Fraud: www.ftc.gov | 1-877-382-4357

National Council for Aging Care: www.aging.com | 1-877-664-6140