In short
A reverse mortgage is a loan for homeowners 62 and older that converts home equity into cash with no required monthly mortgage payment. Most are FHA-insured HECMs. You keep the title, keep paying taxes, insurance and upkeep, and the loan is repaid when the home is sold or the last borrower leaves.
Reviewed by Scottie Campbell, NMLS #1610726 · Last updated October 18, 2026
How does a reverse mortgage work?
A reverse mortgage, usually an FHA-insured HECM, lets homeowners 62 and older borrow against their home equity with no required monthly mortgage payment. You can take the money as a lump sum, a line of credit, monthly payments or a mix. You keep the title, keep paying taxes, insurance and upkeep, and the loan is repaid when the last borrower sells, moves out or passes away. It is non-recourse, so you or your heirs never owe more than the home is worth.
Key takeaways
If you're 62 or older and most of your wealth is in your home, a reverse mortgage may let you use that equity without selling or taking on a monthly mortgage payment. I'm Scottie Campbell, and I explain these loans plainly, including when they're not the right fit, so you and your family can decide with confidence.
What a Reverse Mortgage Actually Is
A reverse mortgage lets a homeowner 62 or older borrow against the equity in their home without making a monthly mortgage payment. Most reverse mortgages today are Home Equity Conversion Mortgages, or HECMs, which are insured by the FHA and regulated by HUD.
With a regular mortgage, you pay the lender every month and your balance goes down. With a HECM, the lender pays you (or pays off your existing mortgage), and the balance grows over time. The loan is repaid later, usually when the home is sold.
Quite frankly, reverse mortgages carry a lot of old baggage. The program has real consumer protections built in, and for the right household it can be a smart retirement tool. For the wrong household it is the wrong tool, and I will tell you that too.
Who Qualifies for a HECM
The basic program rules are straightforward:
- At least one borrower is 62 or older
- The home is your primary residence and you plan to live there
- You have meaningful equity; any existing mortgage is paid off from the loan proceeds at closing
- The property is an eligible type, such as a single-family home, a 2 to 4 unit home where you live in one unit, an FHA-approved condo, or a manufactured home that meets HUD standards
- You complete a counseling session with a HUD-approved counselor before the application moves forward
There is no minimum credit score. Instead, HUD requires a financial assessment that looks at your history of paying property taxes, insurance and other bills, plus your income and monthly obligations. If the assessment shows a gap, part of the proceeds may be set aside to cover future taxes and insurance (called a Life Expectancy Set-Aside). What that means for you is a past credit bump is not an automatic no. It's never a no. It's always a how.
How You Can Receive the Money
A HECM is flexible in how the proceeds reach you. The amount available depends on the age of the youngest borrower or eligible spouse, the home's value and program limits.
| Payout option | How it works | Often fits |
|---|---|---|
| Lump sum | One payment at closing (fixed-rate HECMs use this option) | Paying off an existing mortgage or a large one-time need |
| Line of credit | Draw what you need, when you need it; the unused portion grows over time | A cushion for future expenses or market dips |
| Tenure payments | Monthly payments for as long as you live in the home | Steady income to supplement Social Security or a pension |
| Term payments | Monthly payments for a set number of years | Bridging to another income source |
| Combination | A mix of the options above | Households with more than one goal |
Adjustable-rate HECMs allow the line of credit and monthly options. Your rate depends on your scenario and the day's market. Reach out and I'll price it for real.
What You Keep and What You Still Owe
This part matters, so I walk every family through it slowly:
- You keep the title. The home stays in your name. The lender does not own your house.
- You keep paying property charges. Property taxes, homeowners insurance, flood insurance if required and HOA dues stay your responsibility, and you need to maintain the home.
- The loan comes due later. Repayment is triggered when the last borrower sells, moves out permanently or passes away, or if the property charges are not kept up.
- It is non-recourse. You and your heirs never owe more than the home is worth when it is sold. Heirs can keep the home by paying off the loan, or sell it and keep any remaining equity.
- Spouses have protections. An eligible non-borrowing spouse may be able to stay in the home after the borrower passes, if the rules are met at closing.
HECM for Purchase
A HECM can also be used to buy a home. You bring a larger down payment, often from the sale of your current house, and the reverse mortgage covers the rest. You move into a home that fits this season of life with no monthly mortgage payment. For homeowners downsizing or moving closer to family, I kinda like that strategy because it keeps more cash in your pocket after the move.
Is It the Right Move? A Total Cost Analysis
A HECM has real costs: an upfront FHA mortgage insurance premium, an annual premium, origination and normal closing costs. That is why I run a Total Cost Analysis before anyone signs anything. We compare the HECM against the alternatives, such as staying put with your current loan, a home equity line, or selling and downsizing outright, and look at the total cost over the years you expect to stay.
I strongly encourage adult children or trusted advisors to sit in on the conversation. My job is to educate and empower you. Your job is to decide.
Working With Me
I'm Scottie Campbell, a Mortgage Advisor with more than 23 years in the business, and you're talking to the owner of Waymaker Mortgage Company. My office is at 117 W 7th St in Georgetown, TX, and I'm licensed in Texas, Florida, Pennsylvania and Ohio. Whether you prefer a sit-down at the kitchen table or a phone call, high-tech, high-touch is how I work. Feel free to text me and we'll set up a time to walk through your numbers.
Information on this page is general and educational. It is not a commitment to lend or an offer of credit. Programs, guidelines and eligibility change and depend on your full scenario. Waymaker Mortgage Company, NMLS 2440476. Equal Housing Lender.
Quick facts
- Loan type
- FHA-insured Home Equity Conversion Mortgage (HECM)
- Minimum credit score
- No minimum (HUD uses a financial assessment)
- Minimum age
- 62 for at least one borrower
- Occupancy
- Primary residence
- Monthly mortgage payment
- None required; taxes, insurance and upkeep still apply
- Counseling
- Required with a HUD-approved counselor
Is this loan right for you?
Who it's for
- Homeowners 62 and older with substantial equity who plan to stay put
- Retirees who want to remove an existing mortgage payment
- Households wanting a standby line of credit for future expenses
- Downsizers who want to buy their next home with a HECM for Purchase
Who it may not fit
- Homeowners who expect to move out within a few years
- Anyone who would struggle to keep up with property taxes, insurance and maintenance
- Families whose top priority is leaving the home to heirs free of any loan balance
Pros and cons
Pros
- No required monthly mortgage payment
- No minimum credit score; a financial assessment is used instead
- Flexible payout options, including a line of credit whose unused portion grows
- Non-recourse protection for you and your heirs
- FHA-insured with required independent counseling
Trade-offs to weigh
- Upfront and ongoing FHA mortgage insurance plus closing costs
- The loan balance grows over time, reducing the equity left for heirs
- Taxes, insurance and upkeep must be kept current or the loan can come due
Frequently asked questions
What credit score do I need for a reverse mortgage?
There is no minimum credit score for a HUD HECM. Instead, there is a financial assessment that reviews how you've handled property taxes, insurance and other bills, along with your income and monthly obligations. If there's a gap, part of the proceeds can be set aside to cover future taxes and insurance.
Will the bank own my home?
No. The home stays in your name. You keep living there and keep the responsibilities of ownership, including property taxes, homeowners insurance and maintenance. The loan is simply repaid later, usually when the home is sold.
What happens to my kids or heirs?
When the last borrower passes away, your heirs can keep the home by paying off the loan, or sell it and keep any equity left over. Because a HECM is non-recourse, they will never owe more than the home is worth. I encourage family members to be part of the conversation from the start.
Do I have to own my home free and clear?
No. Many people use a HECM to pay off their existing mortgage, which removes that monthly payment. You do need enough equity for the HECM proceeds to cover the existing loan balance at closing.
Why is counseling required?
HUD requires every HECM borrower to meet with an independent, HUD-approved counselor before moving forward. The counselor explains the costs, obligations and alternatives so you have a full picture. I see it as a helpful second voice, not a hurdle.
Can I use a reverse mortgage to buy a home?
Yes. A HECM for Purchase lets you combine a down payment, often from selling your current home, with reverse mortgage proceeds to buy a new primary residence with no monthly mortgage payment. It's popular with people who are downsizing or moving closer to family.
Related loan programs
Low down payment options, dozens of down payment assistance programs and a Greenlight Approval that helps your offer compete. It's never a no. It's always a how.
Flexible credit, low down payment, and dozens of assistance programs. I'll show you how FHA fits your plan, then you decide.
No monthly mortgage insurance, no minimum credit score on my end, and VA loans funded in house by Waymaker Mortgage Company with underwriting through multiple investors.
Last updated October 18, 2026 · Reviewed by Scottie Campbell, NMLS #1610726. This page is educational and not a commitment to lend; program details change — ask for current figures.