Reverse Mortgage
Commonly referred to as a HECM:
Home Equity Conversion Mortgage
A HECM is a federally insured loan for homeowners (usually age 62+) that lets them convert part of their home equity into cash, while they keep the title and don’t have to make monthly mortgage payments as long as they:
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live in the home as their primary residence
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keep up with property taxes, homeowners insurance, and maintenance
How it works
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You must be 62+
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The home must be your primary residence
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You continue to pay property taxes, insurance, and maintenance
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Instead of making payments to the lender, the lender pays you
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You can receive funds as a lump sum, monthly payments, a line of credit, or a mix (depending on the HECM option).
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The loan is repaid when the home is sold, the borrower moves out permanently, or passes away
Benefits
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Access cash without monthly mortgage payments
You can eliminate (or greatly reduce) your required principal & interest payment while you live in the home as your primary residence. -
The funds you receive are not subject to federal income tax.
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Flexible ways to receive money
Options typically include a lump sum, monthly payments, a line of credit, or a combination. -
You keep ownership (title) to the home
It’s still your house—just with a lien like any mortgage. -
Non-recourse protection
When the loan is repaid, you/your heirs generally won’t owe more than the home’s value (even if the balance is higher). -
Line of credit can be a “standby” safety net
If set up as a line of credit, it can provide liquidity for unexpected expenses (health, home repairs, income gaps) without having to sell investments in a down market. -
Can improve monthly cash flow
Especially for retirees on fixed income—less money going out each month can help budgets. -
No income requirement like a traditional loan
It’s primarily based on age, home value/equity, and property charges ability (you still must show you can pay taxes/insurance/maintenance). -
Can be used strategically in retirement planning
Some people use it to delay Social Security, reduce portfolio withdrawals, or manage sequence-of-returns risk (depends on the plan and the person).
For purchase?
You can—through a program called “HECM for Purchase” (sometimes called a purchase reverse mortgage). It lets someone 62+ buy a new primary residence using a reverse mortgage in one closing, with no required monthly principal & interest payment (you still pay taxes/insurance/HOA and maintain the home).
How it works (step-by-step)
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Pick the home you want to buy (must meet FHA/HUD property standards like any FHA loan).
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You bring a down payment from savings, sale proceeds of your current home, etc.
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The reverse mortgage then covers the rest of the purchase price up to your available “principal limit.”
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Complete HUD-approved reverse mortgage counseling (required for HECMs).
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Close once: your cash + HECM proceeds = the purchase price (and any closing costs not financed).
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Move in quickly: HECM for Purchase requires you to occupy the home within 60 days of closing.
How much money can I get?
The amount you can borrow is mainly based on:
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Age of the youngest borrower (older = generally more available)
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Expected interest rate
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Home value (subject to the FHA “maximum claim amount” cap)
That’s why the “down payment” isn’t a fixed percent like 20%—it’s the gap between the price and your principal limit, plus fees. Many consumer summaries describe it often landing around ~45%–62% depending on age/rates/home value (varies by scenario).
Let's get started
Ready to explore a HECM (reverse mortgage)? Whether you want to:
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Eliminate or reduce an existing mortgage payment (pay off current lien)
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Create a standby line of credit for emergencies or unexpected expenses
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Supplement monthly retirement income with tenure/term payments
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Cover medical, in-home care, or assisted living-related costs (as needed)
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Fund home repairs, maintenance, or accessibility upgrades (ramps, bath mods, etc.)
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Purchase a new primary residence with HECM for Purchase (one closing, no required monthly P&I)
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Reduce withdrawals from investments during market downturns
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Support estate/legacy planning strategies (case-by-case with advisors
Call Jennifer Tompkins to walk through eligibility, estimated proceeds, and next steps—no pressure, just clear answers.
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small print.... (costs and extras)
A HECM (Home Equity Conversion Mortgage) comes with a few common costs:
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Upfront mortgage insurance (FHA)
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Lender origination fee (FHA-capped)
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Standard closing costs (appraisal, title, recording, etc.)
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Required HUD counseling fee (varies)
Ongoing costs are typically added to the loan balance over time:
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Interest on the outstanding balance
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Annual FHA mortgage insurance (MIP) on the balance used
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Possible monthly servicing fee (some lenders)
Borrowers are still responsible for property taxes, homeowners insurance, HOA dues, and home maintenance. Many upfront costs can be financed into the loan, depending on available proceeds.
