Reverse Mortgages (HECM)
Your home has worked for you for years. Now let it work for your retirement.
A reverse mortgage or (HECM) Home Equity Conversion Mortgage lets you turn part of your home equity into tax-free cash, with the option to make a monthly mortgage payment or not, while you keep living in the home you love. It is not right for everyone. My job is to help you know for sure, with no pressure and no confusion.
*Some private (non-FHA) reverse mortgages are available starting at age 55 in certain states.
A quick word from Walt
A few minutes on what a reverse mortgage is, who it helps, and how I walk families through the decision.
What is a reverse mortgage?
A reverse mortgage is a loan for homeowners 62 and older that converts part of your home equity into cash. Instead of you making payments to a lender, the loan balance grows over time as interest and fees are added.
The most common type is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA). That insurance is what gives HECM borrowers some of the strongest consumer protections in lending.
The loan is repaid when the last borrower sells the home, permanently moves out, or passes away. Until then, you keep living in your home, as long as you keep up with property taxes, homeowners insurance, and basic upkeep.
Stay in the home you love
Use a reverse mortgage on the home you already own. Pay off your current mortgage, access your equity, and choose whether to make a monthly mortgage payment or not.
Buy your next home
Right-size, move closer to family, or buy a single-level home. With a HECM for Purchase, you make a down payment and the reverse mortgage covers the rest, giving you the option to make a monthly mortgage payment or not.
How the process works
Four steps, and you can stop at any one of them.
Clarity Call
We talk through your goals, your home, and your whole financial picture. If a reverse mortgage is not the right fit, I will tell you.
HUD Counseling
Every HECM borrower meets with an independent, HUD-approved counselor. Family members are welcome, and I encourage it.
Application and Appraisal
We complete a financial assessment and an FHA appraisal to confirm your home's value and your available proceeds.
Closing and Funding
After closing and a three-day right of rescission on refinances, your existing mortgage is paid off and your funds become available.
Who qualifies?
There are no minimum income requirements like a traditional loan, but HECMs do include a financial assessment to make sure you can keep up with ongoing property costs.
Multiple ways to receive your money
There are multiple ways to receive your money. The most common is to take part of your funds at closing, then after the first year, gain access to the rest as a line of credit you can draw from whenever you need it. Any unused credit grows every year at the same rate as your loan's interest rate, so your available funds keep growing the longer you leave them untouched.
The loan amount of a reverse mortgage is based mostly on the age of the youngest borrower. Typically, a borrower at 62 can access about 45 to 50% of the value of their home, depending on current interest rates.
Pros and cons of a reverse mortgage
A good decision starts with seeing both sides clearly. Here is what I walk every client through.
The Pros
- You choose whether to make a mortgage payment. You have the option to make a monthly mortgage payment or not, giving you more control over your cash flow.
- You keep ownership. Your name stays on the title and you can live in your home for as long as you meet the loan terms.
- Tax-free proceeds. Loan funds are generally not considered taxable income. Check with your tax advisor for your situation.
- Non-recourse protection. Neither you nor your heirs will ever owe more than the home is worth when it is sold, even if the balance is higher.
- A growing line of credit. Unused credit grows over time and cannot be frozen or reduced due to changes in home value, which makes it a powerful safety net.
- Social Security and Medicare are not affected. Proceeds do not change these benefits.
- Protects your investments. Drawing from home equity in down markets can help you avoid selling investments at a loss.
- Flexible payout options. Take funds at closing, a line of credit, or both.
- Spouse protections. An eligible non-borrowing spouse may be able to remain in the home after the borrower passes away.
The Cons
- Higher upfront costs. FHA mortgage insurance, an origination fee, and standard closing costs. Most can be financed into the loan.
- The loan balance grows. Interest and ongoing mortgage insurance (0.5% per year) are added to the balance over time.
- Adjustable rates cut both ways. Most borrowers choose an adjustable rate because it comes with a line of credit, while a fixed rate requires taking all your money at closing. If rates rise, your loan balance grows faster, but so does your unused line of credit.
- Less equity for heirs. Your heirs still inherit the home and any remaining equity, but there will likely be less of it.
- Ongoing obligations remain. You must pay property taxes, homeowners insurance, and any HOA dues, and maintain the home. Falling behind can put the loan in default.
- Not ideal for a short stay. If you plan to move within a few years, the upfront costs may outweigh the benefits.
- Can affect needs-based benefits. Money you hold onto may count toward Medicaid or SSI limits. Timing matters.
- Extended absences trigger repayment. If all borrowers live elsewhere, including a care facility, for more than 12 consecutive months, the loan becomes due.
- More complex than a traditional loan. Which is exactly why counseling is required and why working with an advisor who explains it clearly matters.
Common misconceptions, and the truth
This is not your parents' or grandparents' reverse mortgage.
Most of what people "know" about reverse mortgages comes from old rules or secondhand stories. The Reverse Mortgage Stabilization Act of 2013 gave HUD the authority to overhaul the program with major modern reforms, including financial assessments to make sure borrowers can afford to stay in their homes, limits on how much equity you can use, and stronger protections for spouses. Here is what is actually true today.
"The bank takes my house."
Truth: You keep the title. The lender holds a lien, just like a traditional mortgage.
"My kids will be stuck with the debt."
Truth: HECMs are non-recourse. Heirs can sell the home and keep any remaining equity, or keep the home by paying the balance or 95% of the appraised value, whichever is less.
"I can't have a mortgage already."
Truth: Many borrowers use a reverse mortgage to pay off their existing mortgage, giving them the option to make a monthly mortgage payment or not.
"It's only a last resort."
Truth: Many financial planners now use reverse mortgages proactively as part of a well-designed retirement strategy.
"I can end up owing more than my home is worth."
Truth: If the loan balance ever exceeds the home's value, FHA insurance covers the difference. Not you, and not your heirs.
"My line of credit can be cut if home values drop."
Truth: Your HECM line of credit cannot be frozen or reduced because of changes in your home's value.
"I'll lose my Social Security or Medicare."
Truth: Reverse mortgage proceeds do not affect Social Security or Medicare benefits.
"The money is taxable income."
Truth: Proceeds are loan advances, not income, so they are generally not taxed. Check with your tax advisor for your situation.
"My spouse gets forced out if I pass away."
Truth: An eligible non-borrowing spouse has protections that may allow them to stay in the home, as long as the requirements are met.
"Reverse mortgages are a scam."
Truth: HECMs are insured by the FHA and require counseling with an independent, HUD-approved counselor before you can move forward.
"I have to be wealthy or debt-free to qualify."
Truth: There is no minimum income requirement. A financial assessment simply confirms you can keep up with taxes, insurance, and upkeep.
What does it cost?
Reverse mortgage costs are regulated by FHA and most can be paid from the loan proceeds rather than out of pocket. I will show you every number before you decide anything.
| Cost | How it works |
|---|---|
| Upfront FHA mortgage insurance | 2% of home value, up to the FHA limit |
| Annual FHA mortgage insurance | 0.5% of the loan balance per year |
| Origination fee | Varies by home value, set by FHA guidelines |
| Third-party closing costs | Appraisal, title, escrow, recording |
| Counseling fee | Typically modest, sometimes free |
For financial planners, CPAs and attorneys
A reverse mortgage is a strategic tool, not a last resort. I partner with advisors to help clients use home equity as one piece of a coordinated plan, always with the client's full team at the table.
- Buffer asset to reduce sequence-of-returns risk
- Delay Social Security to maximize lifetime benefits
- Tax-efficient cash flow alongside IRA and Roth planning
- Funding for in-home care and aging in place
Frequently asked questions
How much money can I get?
The older you are, the more you can access. The amount available, called your principal limit, is based on the age of the youngest borrower, your home's value (up to $1,249,125 for a HECM in 2026), and current interest rates. Borrowers in their 60s can typically access a smaller percentage of their home's value, while those in their 70s and 80s can access more. I'll run your exact numbers so you know precisely where you stand.
What if my home is worth more than the FHA limit?
Private (proprietary or "jumbo") reverse mortgages can offer higher loan amounts for higher-value homes. We can compare both.
When does the loan have to be repaid?
When the last borrower sells, permanently moves out, or passes away, or if loan terms such as paying property taxes and insurance are not met.
What happens to my spouse if they are under 62?
An eligible non-borrowing spouse may be able to stay in the home after the borrower passes, as long as the requirements are met. We plan for this from day one.
Can I sell my home later?
Yes, at any time. The loan is paid off from the sale and you keep the remaining equity.
Is there a prepayment penalty?
No. You can make payments or pay the loan off in full at any time without penalty.
Should my family be involved?
I strongly encourage it. Adult children and trusted advisors are always welcome at our meetings and at counseling.
Walt Schulz is a mortgage advisor and team lead at The Schulz Team, powered by Waterstone Mortgage in Salem, Oregon. He also runs Shop with a Cop, a local nonprofit, and built his practice around one goal: helping people make one of the biggest financial decisions of their lives without confusion, without pressure, and without bad advice.
Leave with complete clarity, not more confusion.
Whether a reverse mortgage turns out to be the right move or not, you will walk away understanding your options. No cost, no obligation.
- An estimate of what you may qualify for
- Which payout option fits your goals
- Straight answers on costs, heirs, and your spouse
Have questions before you fill anything out?
A free 20-minute call is the easiest way to find out if a reverse mortgage makes sense for you or someone you love.