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Borrower Eligibility
  • All borrowers must be 62 and older
  • Must own property and occupy as primary residence
  • Participate in an information counseling session
  • Property must meet FHA property standards
  • Maintain home with needed repairs, property taxes and insurance
Loan Amount Based On
  • Age of youngest borrower
  • Current interest rate
  • Lesser of appraised value or the FHA insurance limit

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Requirements and Application Qualifications Needed to Apply for a Reverse Mortgage

Despite the good news you may have read about reverse mortgages, the fact remains that they are like any other loan. To get the best deal, you need to get quotes from at least three programs. In order to close a deal with the lender, you need to apply and then pass certain application requirements before you are approved.

There are many senior citizens who are looking to complete a reverse mortgage application. The reverse mortgage program that receives the largest number of applications is the Home Equity Conversion Mortgage (HECM). Most seniors apply to this program.

The FHA insures the HECM loan, which is a division of the U.S. Department of Housing and Urban Development (HUD). If you are one of these applicants, check if you meet the following requirements and qualifications before you apply:

  • Requirement 1 - You are at least 62 years old,
  • Requirement 2 - You own your own primary residence,
  • Requirement 3 - Your home is a single-family home, a one-unit to four-unit dwelling, a condominium unit or some other HUD-recognized dwelling unit (trailer homes and cooperative houses are excluded),
  • Requirement 4 - Your home meets the HUD's standards, and
  • Requirement 5 - You have already talked with a reverse mortgage counselor regarding the program.

You can apply for an HECM reverse mortgage anywhere if you meet the requirements and qualifications. HECM is available in many States – the requirements and qualifications are more or less the same. It is also available in Puerto Rico and the District of Columbia. It is always a good idea to get a quote from at least three lenders.

With HECM loans, the older the senior applicant, the greater the loan amount he or she can apply for. If, for example, the equity on your home equals $250,000 you can qualify for a $110,000 loan assuming you are of minimum age. At 76 years old, your new qualifications can get you a $149,000 loan. The actual loan amount is derived from the FHA’s mortgage limit in your area.

Debunking of Myths

There are a lot of myths surrounding reverse mortgages (the most factual information are the quotes). Chief among these myths is the belief that ownership of the home is assigned to the lender once the loan takes effect. The fact is, you will own your home even with a reverse mortgage. You will also remain responsible for its upkeep and taxes. If you choose you can even sell your home, repaying the reverse mortgage loan with the sale proceeds.

Another myth surrounding reverse mortgage loans is that the surviving family assumes responsibility when the borrower dies. This is false since reverse mortgages are non-recourse loans. The only time a lender recovers his investment is when the home is sold or refinanced.

You do not need a clean credit report to apply for a reverse mortgage. You can even have a small outstanding balance on your mortgage and still qualify. Even with different quotes, an HECM reverse mortgage is still the same: it is a multiple purpose loan that you can use as you wish. An HECM lender will not even look at your credit report.

When your reverse mortgage application is approved, the money can be paid out in different ways:

  • Through a line of credit,
  • In monthly payments for as long as applicant lives and occupies the home,
  • In monthly payments for a fixed number of months,
  • A combination of equal monthly payments and line of credit for a fixed number of months.

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