Reverse Mortgage Requirements: Do You Qualify?

Types of Reverse Mortgages

There are a few types of reverse mortgages available depending on your situation and needs:

• Home equity conversion mortgages: The Federal Housing Administration (FHA) insures these loans, and borrowers must be 62 or older. The loan size is limited to $1,149,825 as of 2024 and you can use it for any purpose you want.
• Single-purpose reverse mortgages: These loans have stricter requirements than HECM mortgages, and you can only use the proceeds for specific purposes, like home repairs. This type of reverse mortgage doesn't fall under the FHA, and you can apply for it through local government or non-profits.
• Proprietary reverse mortgage loans: If you need a loan for a higher amount than the FHA's limit, you can get a jumbo reverse mortgage from a private lender. In most states, you can apply for this loan type at the age of 55 or older. Exceptions include Washington (60+), and Utah, North Carolina, and Texas (62+).

HECM Loan Borrower Requirements

Have Enough Home Equity

You'll need to own your home outright or have a large amount of equity since this is what gives you the loan. If you do have an existing mortgage, the FHA requires you to use your reverse mortgage proceeds to pay it off when you close.

To get an idea of what your potential loan proceeds could be, you can use our reverse mortgage loan calculator.

Residence Requirements

Whatever home you use to apply for the mortgage must be your primary residence. You can't get a HECM reverse mortgage on vacation or rental properties.

Financial Requirements

You don't have to meet certain credit score requirements to get approved, but you must pass other financial checks:

• No liens on your home
• No overdue federal debt like unpaid taxes or student loans
• Proof of income to cover homeowners insurance, property taxes, and maintenance

Property Eligibility

Your property must meet FHA's habitability requirements:

• Safety: Accessible home without health or safety hazards; working heat, electricity, and water
• Space: Enough livable space for the homeowner
• Structure: No foundation cracks or exterior damage like a leaking roof

If the home needs repairs, the lender may require them before closing or use a set-aside account for up to six months post-closing (if costs don’t exceed 15% of loan proceeds).

Eligible Property Types

• Single-family homes (1–4 units)
• Manufactured homes built after June 1976
• Condos and townhouses

Counseling

All reverse mortgage borrowers must attend a counseling session with a HUD-approved agency. This step ensures you're fully informed and protected from fraud or confusion.

During counseling, the agency will cover:

• Borrower situation: Understanding your goals and offering alternatives like home equity loans or refinancing
• Responsibilities: Ongoing costs like property taxes, insurance, and maintenance
• Loan costs: One-time and annual fees including:
  • 2% mortgage insurance premium at closing
  • 0.5% annual insurance on the loan balance
  • Appraisal, title search, origination, and servicing fees

After your session, you’ll receive a certificate valid for 180 days to include with your application.

Final Thoughts

As long as you have enough equity in your home and meet the minimum age requirement, a reverse mortgage can be a helpful financial option. You don't need high income or a strong credit score like with a traditional mortgage. This flexibility may allow you to stay in your home longer and enjoy a more secure retirement.

Reverse Mortgage Requirements: FAQs

How much income do you need to get a reverse mortgage?

You don’t need a specific income to qualify. Equity is the key factor in getting approved.

Who is not a candidate for a reverse mortgage?

If you don’t meet the age requirement or your home has a high outstanding balance and low equity, you're not eligible.

How much equity do you need to get a reverse mortgage?

Lenders typically require at least 50% equity, though some may offer flexible options based on your situation.