Mortgage questions, answered
Real questions borrowers ask, answered in plain English by The Mortgage Advisory, a mortgage lender and broker licensed in California, Texas, Florida, and Colorado (NMLS #1549739).
17 answers in Reverse Mortgage
Clear searchCan you lose your home with a reverse mortgage?
Only if the loan terms aren't kept up: the last borrower moves out, property taxes or homeowners insurance go unpaid, or the home isn't maintained. At The Mortgage Advisory, we set up every reverse mortgage with those costs planned for from day one, so our clients can focus on enjoying their home.
Is a reverse mortgage a scam?
No. Most reverse mortgages are Home Equity Conversion Mortgages (HECMs), insured by the FHA, and you meet with an independent HUD-approved counselor before you can even apply. At The Mortgage Advisory, we see them as a legitimate retirement tool that fits some homeowners really well and others not at all. The bad reputation comes from bad sales practices, not the loan.
Can I get a reverse mortgage if my home is worth more than the FHA limit?
Yes. An FHA-insured HECM only counts your home's value up to $1,249,125 in 2026, so owners of higher-value homes often get more from a jumbo (proprietary) reverse mortgage, with loans up to about $4 million from some lenders in select states. Jumbo reverse mortgages aren't FHA-insured HECMs and have their own terms. The Mortgage Advisory compares both for your home.
What are the alternatives to a reverse mortgage?
There are a dozen of them. You can defer property taxes through a state program, sell and downsize, buy a smaller home with a reverse mortgage for purchase, take a HELOC, home equity loan, or cash-out refinance, use a reverse mortgage second, rent out a room, or get help from family. Each trades something different: a monthly payment, your equity, or your home. The Mortgage Advisory walks you through all of them, including the ones we don't offer.
What happens to a reverse mortgage if my parent moves into assisted living or a nursing home?
On an FHA-insured HECM, the loan usually comes due if the last borrower lives away from the home for more than 12 consecutive months for health reasons, like assisted living or a nursing home. If a co-borrower or an eligible non-borrowing spouse still lives there, the loan generally doesn't come due. The family can then sell, refinance, or keep the home, and The Mortgage Advisory helps them plan ahead.
Can I get a reverse mortgage without paying off my current low-rate mortgage?
Yes, with a reverse mortgage second. A standard FHA-insured HECM has to pay off your current mortgage, but a second-lien reverse mortgage sits behind it, so you keep your low rate and your payment exactly as they are. The Mortgage Advisory offers reverse mortgage seconds for homeowners who want to tap their equity without giving up a great first-mortgage rate.
How does a reverse mortgage line of credit grow, and how can I use it?
On an FHA-insured HECM, the part of your line of credit you don't use grows every year at the same rate as the loan balance: your interest rate plus the 0.5% annual FHA insurance premium. You never have to draw from it, draws aren't taxable income, and there's no monthly payment. The Mortgage Advisory helps retirees set one up early and keep it as a standby source of cash for emergencies, home care, or a down market.
Does a reverse mortgage affect Medicaid, Social Security, or Medicare?
Social Security and Medicare aren't affected, because reverse mortgage money is loan proceeds, not income. Needs-based programs like Medicaid and SSI are different: money you draw isn't income in the month you get it, but whatever you keep into the next month can count as an asset. Drawing only what you need from a line of credit usually avoids the problem. The Mortgage Advisory will help you plan draws, and a benefits specialist can confirm your situation.
Can a reverse mortgage pay me every month for life?
Yes. An FHA-insured HECM's tenure option pays you a set amount every month for as long as at least one borrower lives in the home as a primary residence, even if the loan balance grows past the home's value. That's why other countries call it a housing pension. The Mortgage Advisory helps you compare monthly payments, a line of credit, or a mix of both.
Can I get a reverse mortgage if my spouse is under 62?
Yes. If you're 62 or older and your spouse is younger, your spouse can be named at closing as an eligible non-borrowing spouse on an FHA-insured HECM, which may let them stay in the home after you pass. The trade-off is that loan amounts are based on the younger spouse's age, so they're lower. The Mortgage Advisory structures the loan so both of you are protected.
Is reverse mortgage money taxable, and can it help with taxes in retirement?
No, reverse mortgage money generally isn't taxable income, because it's loan proceeds. That can help in retirement: borrowing instead of selling may preserve your heirs' stepped-up basis, and draws don't count toward Medicare's income surcharges. They can also leave room for Roth conversions or help you delay Social Security. The Mortgage Advisory sets up the loan, and your CPA and financial advisor should model the tax side with you.
Can I get a reverse mortgage if my home is in a trust?
Usually, yes. A revocable living trust is generally eligible for an FHA-insured HECM once the trust passes HUD's review, and the home can stay in the trust. Irrevocable trusts generally aren't eligible for a HECM, though some proprietary loans may allow them. The Mortgage Advisory works with your estate attorney so the loan fits your estate plan and your heirs know their options.
What happens to a reverse mortgage when the borrower dies, and do the heirs have to pay it back?
The loan becomes due, but heirs don't pay it out of their own pockets. On an FHA-insured HECM, they can keep the home by paying off the loan for the lesser of the balance or 95% of the appraised value, sell it and keep any equity left over, or hand the keys back. They'll never owe more than the home is worth. The Mortgage Advisory walks families through these options before and after.
Should I sell and downsize, or stay put with a reverse mortgage?
It comes down to whether this home still fits your life. Selling and downsizing frees up cash and cuts upkeep, but selling and moving often cost 8% to 10% of the home's value, plus leaving your neighborhood. A reverse mortgage lets you stay, but the balance grows. There's also a middle path: a reverse mortgage for purchase lets you buy a smaller home with no monthly mortgage payment. The Mortgage Advisory compares all three with your real numbers.
Can seniors defer property taxes in California, Texas, Florida, or Colorado?
Yes. California, Texas, Florida, and Colorado each have a program that lets qualifying older homeowners put off paying property taxes, with the deferred amount plus interest repaid when the home is sold or ownership changes. Ages, income limits, and deadlines differ by state, and a mortgage or reverse mortgage can affect eligibility. The Mortgage Advisory helps homeowners compare tax deferral with other options before deciding.
When is a reverse mortgage a bad idea?
A reverse mortgage may not be right if you're likely to move into assisted living or a nursing home soon, if it won't actually improve your cash flow for the rest of retirement, if you (or the person signing) don't fully understand the loan, or if leaving the home free and clear to your heirs is your top priority. The Mortgage Advisory walks through all four with you before recommending anything.
Who qualifies for a reverse mortgage, and how much equity do I need?
For an FHA-insured HECM, every borrower must be 62 or older, the home must be your primary residence, and you need enough equity to pay off any current mortgage and still get a real benefit, often around half the home's value or more. You'll also complete HUD-approved counseling and a financial assessment. The Mortgage Advisory runs these numbers with you first, so you know whether it works before you apply.