Reverse Mortgage / HECM Guide
Turn Your Home Equity Into Retirement Cash Flow — Without Selling Your Home
A reverse mortgage (HECM) lets homeowners 62 and older convert part of their home equity into tax-free cash — with no monthly mortgage payments required. You keep your home. You keep ownership. Your heirs keep what's left. Here's how it really works.
62+Minimum age
No monthly paymentFor life of the loan
FHA-insuredHECM program
Non-recourseYou owe only the home value
In this guide
Why Retirees Use a Reverse Mortgage
A HECM converts a portion of your home's value into tax-free cash flow — lump sum, monthly payments, line of credit, or any combination. You keep the title. You keep the home. The loan is only repaid when you sell, move out permanently, or pass away.
No Monthly Payments
You're not required to make monthly principal or interest payments. Interest accrues on the loan balance instead. You can make voluntary payments if you choose.
You Keep the Home
You remain the owner. Your name stays on the title. You live in the home as long as you want, as long as you maintain it and pay property taxes and homeowner's insurance.
Cash Is Tax-Free
The proceeds from a reverse mortgage are loan proceeds — not income. The IRS doesn't tax them. They typically don't affect Social Security or Medicare benefits (talk to your CPA).
Non-Recourse Loan
If your loan balance ever exceeds the home's value, neither you nor your heirs owe the difference. The FHA insurance fund covers it. Your other assets are protected.
Surviving Spouse Protected
If your spouse is on the loan, they continue living in the home payment-free after you pass. Non-borrowing spouses also have protections under federal rules.
Growing Line of Credit
One of the lesser-known features: a HECM line of credit grows over time, even if you don't draw on it. The unused portion increases at the same rate the loan would accrue.
Reverse Mortgage Myths vs Truth
Reverse mortgages have a complicated reputation, mostly from bad actors in the 1990s and early 2000s. The modern HECM program (post-2014 reforms) is dramatically different. Here's the honest breakdown.
Myth
"The bank takes my home."
False. You retain title and ownership. The bank places a lien (like any mortgage), but you remain the legal owner. You can sell, pass it to heirs, or move — on your terms.
Truth
You keep title and ownership.
The home stays in your name. You and any non-borrowing spouse continue living there for life as long as you meet basic obligations: stay current on property taxes, maintain insurance, and keep the home in reasonable condition.
Myth
"My kids can't inherit the house."
False. Heirs absolutely can inherit. They have up to 12 months after the last borrower passes to pay off the reverse mortgage balance (by selling the home, refinancing, or paying with other assets). Anything left over after the payoff goes to them.
Truth
Heirs inherit the home's remaining equity.
If the home is worth more than the loan balance, your heirs keep the difference. If the home is worth less (non-recourse), they owe nothing — FHA insurance covers the gap. They can never owe more than the home is worth.
Myth
"It's only for desperate seniors."
False. Modern financial planners now use HECMs as a strategic retirement tool — specifically the growing line of credit feature, which provides a hedge against sequence-of-returns risk and lets retirees preserve their investment portfolios during market downturns.
Truth
It's a planning tool, not a last resort.
Recent academic research (notably from Wade Pfau and Barry Sacks) has shown HECM lines of credit, used proactively, can extend retirement portfolio longevity by 10+ years. AARP and the GAO both publish frameworks for strategic HECM use.
Three Ways to Receive Your Money
A HECM lets you choose how the proceeds come out. You can mix and match across these three options.
Option 1 · Most Popular
Lump Sum at Closing
Receive a one-time lump-sum disbursement at closing. Often used to pay off an existing mortgage (eliminates that monthly payment forever) or for a major one-time expense.
Best for: Eliminating an existing mortgage, home renovation, large purchase, or estate planning.
Option 2
Monthly "Tenure" Payments
Receive a fixed monthly payment for as long as you live in the home. Works like a private pension — predictable cash flow for life.
Best for: Supplementing Social Security with reliable monthly cash flow to cover ongoing living expenses.
Option 3 · Smartest
Growing Line of Credit
Set up a credit line you can draw from when needed. The unused portion grows at the same rate the loan would have accrued. Often the most powerful long-term option.
Best for: Hedging against market downturns, covering future medical bills, or maintaining liquidity without drawing now.
HECM Eligibility — The 6 Requirements
Reverse mortgages have specific HUD requirements. If you check these six boxes, you qualify.
You're at least 62 years oldAll borrowers on title must be 62+. Younger non-borrowing spouses have specific federal protections.
You own your home (or have low remaining mortgage)You must own the home outright OR have enough equity that the HECM proceeds pay off any existing mortgage.
You live in the home as your primary residenceVacation homes and rental properties don't qualify. You must occupy as primary residence within 60 days of closing.
You've completed HUD-approved HECM counselingRequired by law. A 60-90 minute session with an independent HUD-approved counselor. Typically $125-$200 (sometimes free).
You can afford taxes, insurance, and maintenanceSince 2014, HUD requires a "financial assessment" to verify you can keep up with property taxes, insurance, and basic maintenance. Failure can trigger loan acceleration.
The property meets FHA standardsMost single-family homes qualify. Condos must be FHA-approved or use single-unit approval. Manufactured homes need specific standards.
Free · No Pressure
Get Your HECM Estimate
A licensed reverse mortgage specialist will call you back to walk through your specific scenario, explain counseling, and provide a no-cost estimate. No credit pull on the first call. No pressure.
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A licensed reverse mortgage specialist will call to discuss your scenario and walk through the counseling process.
Need to talk now? Call us directly:
☎ (877) 870-0007Borrower Protections (Modern HECM Reforms)
The HECM program was significantly strengthened in 2014-2017. Today's HECM has built-in protections that didn't exist in older reverse mortgages.
- Mandatory independent counseling from a HUD-approved counselor before closing
- "Cooling off" period after counseling — you can change your mind
- Non-recourse: you (or your heirs) can never owe more than the home is worth
- Non-borrowing spouse can stay in the home even after the borrowing spouse passes
- Initial disbursement limit caps how much you can take in year 1
- Financial assessment confirms you can afford ongoing tax/insurance/maintenance
- FHA insurance protects you AND the lender — not just the lender
- Counseling agencies cannot be paid by the lender (independence requirement)
The 5-Step HECM Process
Reverse mortgages take longer than regular loans, mostly due to the required counseling. Most close in 30-60 days.
1
Free Consultation
Talk through your goals, current finances, and which payout option fits. We provide a "good faith" estimate.
2
HUD Counseling
You meet with a HUD-approved counselor (phone or video). 60-90 min. We give you the approved list.
3
Application
Complete the HECM application. We pull credit (soft check), order title, and start financial assessment.
4
Appraisal & Underwriting
FHA-approved appraisal. Underwriting verifies you meet HUD requirements. Typically 2-3 weeks.
5
Closing
Sign at home or at our office. You have a 3-business-day right of rescission afterward.
Reverse Mortgage FAQ
The questions we hear most often from seniors and their adult children.
What happens to my home when I die?
Your heirs have up to 12 months to settle the loan, typically by selling the home or refinancing. Anything left over after paying off the HECM goes to them. If the home is worth LESS than the balance (non-recourse), they owe nothing and can walk away — FHA insurance covers the gap. Heirs are never personally on the hook.
Can I lose my home with a reverse mortgage?
Only if you fail to meet basic obligations: paying property taxes, maintaining insurance, and keeping the home in reasonable condition. Modern HECMs require a financial assessment to confirm you can meet these obligations BEFORE you close. The loan can also be called due if you move out for more than 12 consecutive months.
How much money can I get?
Depends on three factors: your age (older borrowers qualify for more), the home's appraised value, and current interest rates. A 65-year-old with a $500,000 home might qualify for $200,000-$280,000. A 75-year-old with the same home might qualify for $240,000-$320,000. We'll give you an exact number after appraisal.
Will it affect my Social Security or Medicare?
Social Security retirement benefits and Medicare are NOT affected. However, "needs-based" programs like Medicaid and SSI CAN be affected if you keep large amounts of HECM cash in a bank account (counted as an asset). Talk to a benefits counselor before drawing large amounts.
What if my spouse is under 62?
Federal rules now allow non-borrowing spouses to remain in the home for life after the borrower passes, as long as conditions are met (continuous marriage, primary residence). This is critical to set up correctly at closing.
How much does a HECM cost upfront?
Typical costs: Upfront Mortgage Insurance Premium (2% of home value), origination fee ($2,500-$6,000 capped by HUD), appraisal ($500-$800), counseling ($125-$200), title insurance, and recording fees. Total upfront costs typically run $10,000-$18,000, almost always FINANCED into the loan.
Can I pay off a HECM early?
Yes, anytime, with no prepayment penalty. You can pay the entire balance off, sell the home and pay it off, or refinance it away. Voluntary monthly payments are also allowed.
Is a HECM better than a HELOC for seniors?
Often, yes — especially for borrowers in their 70s+. Key differences: HECM has no monthly payment, no credit-score gymnastics, the credit line GROWS over time, and your lender can't freeze or reduce it (HELOCs got frozen in 2008-2009 for many borrowers). HELOC may make more sense if you only need short-term liquidity.
Does OnPoint have HECM specialists?
Yes. Reverse mortgages require specific licensing and ongoing training. Our team has placed HECMs across all 9 of our licensed states. We take more time with each HECM conversation than any other loan type — for you, your spouse, and any adult children you want involved.
Talk Through Your Options with a HECM Specialist
No pressure. No credit pull on the first call. We can include your spouse or adult children on the call if you'd like — many families do this together. We'll explain how a HECM works for your specific home, age, and goals.
☎ (877) 870-0007Mon-Fri 8am-7pm PT · Sat 9am-3pm PT · Licensed in 9 states · NMLS #2134550
Terms & Conditions: Reverse mortgages (HECM - Home Equity Conversion Mortgages) are FHA-insured loans available to homeowners 62 and older. Borrower retains title to the home. Loan must be repaid when borrower no longer occupies the home as primary residence, sells, or passes away. Borrower must continue paying property taxes, homeowner's insurance, and maintaining the home; failure can result in loan acceleration. Loan is non-recourse: borrower and heirs cannot owe more than the home is worth at time of sale. HUD-approved counseling is required before application can be submitted. Costs include Upfront MIP (typically 2% of home value), origination fee (capped by HUD), appraisal, counseling fee, title, and closing costs, typically financed into the loan. Source: HUD Handbook 4235.1, FHA Single Family Policy Handbook 4000.1, National Reverse Mortgage Lenders Association. OnPoint Mortgage Pro is a licensed mortgage broker; NMLS #2134550. Equal Housing Lender.