Buying a home with a reverse mortgage works differently from a traditional purchase loan. Here are answers to some of the most common questions.

Do I have to sell my current home?

No. You do not necessarily have to sell your current home to use a reverse mortgage to purchase a new primary residence.

Many homeowners use proceeds from the sale of their current home toward the purchase, but other eligible funds may also be used. Depending on the program, acceptable sources may include cash, savings, proceeds from investments or other assets, and other approved sources.

You may also be able to keep your current home as a second home or rental property. However, the home purchased with the reverse mortgage must become your primary residence, and the expenses associated with any property you keep may be considered when determining your eligibility.

What makes the reverse mortgage become due?

A reverse mortgage generally becomes due when the last remaining borrower sells the home, permanently moves out, or dies.

The loan may also become due if important loan requirements are not met, such as maintaining the home as your primary residence, keeping property taxes and homeowners insurance current, paying applicable HOA or other property charges, and maintaining the property.

For FHA-insured HECMs, certain eligible non-borrowing spouses may have protections that allow them to remain in the home after the borrowing spouse dies, provided HUD requirements continue to be met. Private reverse mortgage programs may have different provisions.

When the loan becomes due, the home does not automatically become the lender's property. The loan may generally be repaid through the sale of the home, refinancing, or other funds, and any remaining equity belongs to the homeowner or the homeowner's estate.

What are the eligibility requirements?

For an FHA-insured Home Equity Conversion Mortgage, or HECM, borrowers generally must be at least 62 years old. The home must be your primary residence and meet applicable property requirements. HECM applicants also complete a financial assessment designed to determine whether they can continue meeting the ongoing obligations of homeownership, including property taxes, homeowners insurance, applicable HOA charges, and property maintenance. HECM borrowers must also complete counseling with an independent HUD-approved reverse mortgage counselor before closing.

Private reverse mortgages have their own eligibility guidelines. Some programs available in California may be available to homeowners as young as 55 and may have different property, financial, and counseling requirements.

Can I use a private reverse mortgage to purchase a home?

Yes. Certain private, or proprietary, reverse mortgage programs may be used to purchase a new primary residence.

These programs are different from the FHA-insured HECM for Purchase. HECM borrowers generally must be at least 62, while some private programs may be available at younger ages and may accommodate higher-value homes or properties that do not fit HECM guidelines.

Private reverse mortgage programs are lender-specific, and availability, minimum age, required borrower contribution, property eligibility, and underwriting guidelines can change. We can review the programs currently available and help determine which options may fit your situation.