Reverse mortgage (HECM)
Turn home equity into retirement cash flow, with the guardrails explained in plain English.
Short answer
A reverse mortgage, formally a HECM, lets homeowners 62 and older convert part of their home equity into monthly cash flow or a line of credit, with no required monthly principal and interest payment. HUD-approved counseling comes first, by law and by my process. You keep title to your home.
Reverse mortgage borrowers must complete a counseling session with a HUD-approved counselor before applying. This material is not from HUD or FHA and has not been approved by HUD or any government agency.
Who this is for
- Homeowners 62 and older who want retirement cash flow without selling the home
- Retirees who want a standby line of credit for long-term care or market downturns
- Families who want the decision made together, slowly, with everything on the table
- Homeowners tired of a required monthly mortgage payment eating into fixed income
What it takes to qualify
- The youngest borrower is 62 or older. Eligible non-borrowing spouse protections exist for younger spouses and must be set up correctly at closing.
- The home is your primary residence and meets FHA property standards.
- Sufficient equity in the home. This is reviewed case by case, and I will tell you plainly if the numbers do not work.
- A completed session with an independent HUD-approved counselor before you apply. Not optional, and not something I would skip if it were.
- A financial assessment showing you can keep up property taxes, homeowners insurance, and basic upkeep.
How it works with me
A process you can see the whole way through
A family conversation
We start with an unhurried call, family welcome. I explain the product in plain English and listen for whether it actually fits your retirement picture.
Independent counseling
You meet with a HUD-approved counselor who does not work for any lender. I encourage adult children to join. No application happens before this.
A manual review
I review your equity, obligations, and payout options by hand and show you how each structure behaves over time, including the ones I would not pick.
Close at your pace
If the fit is right, we proceed. If it is not, I tell you plainly and we look at alternatives. Nobody gets rushed into a reverse mortgage on my watch.
What to know before you decide
Counseling comes first. I mean it.
Before any application, federal law requires a session with an independent HUD-approved counselor. They do not work for me or any lender. They confirm you understand the costs, the obligations, and the alternatives, including doing nothing. I think this is one of the best consumer protections in lending, and I ask families to treat it that way. Bring your adult children or your financial advisor to the session. The more eyes, the better the decision.
How a HECM actually works
You keep title. The lender holds a lien, the same as any mortgage. Interest accrues on what you have drawn, and no monthly principal and interest payment is required while you live in the home. The loan comes due when the last borrower, or a protected eligible non-borrowing spouse, permanently leaves the home. You must stay current on property taxes, homeowners insurance, and upkeep the whole time.
HECMs are insured by FHA and are non-recourse. Neither you nor your heirs will ever owe more than the home's value when it is sold to repay the loan. If the balance has grown past the value, FHA insurance covers the gap. Heirs can also choose to keep the home by paying off the balance, or sell it and keep the remaining equity.
How you can take the money
The main options are a line of credit, monthly payments for a set term or for as long as you live in the home, a lump sum, or a combination. Lump-sum draws are generally tied to fixed-rate HECMs, and the line of credit is an adjustable-rate feature. I will never describe an adjustable product as fixed, and I will show you how each option behaves before you choose.
The unused portion of a HECM line of credit has a growth feature, which is why retirement researchers often treat it as a standby resource rather than a last resort. Used deliberately, it can protect savings in down markets. Used desperately, it can paper over a budget problem. The counseling session and an honest review sort out which situation you are in.
My process is manual on purpose
No automated pre-qualification, no pressure sequence. We meet, ideally with family in the room or on the call. I map your goals, your other resources, and the obligations that come with the loan. If a HECM is not the right fit, I will say so and point you at the better tool, whether that is a HELOC, downsizing, or leaving things alone. Most of my reverse conversations take weeks, and that is fine.
Three ways to tap equity later in life
| Reverse mortgage (HECM) | HELOC | Cash-out refinance | |
|---|---|---|---|
| Required monthly payment | No principal and interest payment required | Yes, at least interest during the draw period | Yes, full payment on the new loan |
| Age requirement | 62 or older | None | None |
| Independent counseling | Required by law before applying | Not required | Not required |
| How you receive funds | Line of credit, monthly payments, lump sum, or a mix | Draw as needed | Lump sum at closing |
| Effect on first mortgage | Pays it off as part of the loan | Sits behind it, first mortgage unchanged | Replaces it entirely |
Qualitative comparison. Every situation deserves its own review.
Rates and terms subject to change without notice. Not a commitment to lend. Not available in all states. This is not tax, legal, or financial advice. Consult a qualified professional for your specific situation.
Run your own numbers first
The HELOC versus cash-out comparison on the calculators page is the honest starting point: it shows how the alternatives to a reverse mortgage behave, so the counseling conversation starts from real numbers.
Open the calculatorsRelated programs
Reverse mortgage (HECM): common questions
Will the bank own my home with a reverse mortgage?
No. Title stays in your name, exactly like a traditional mortgage. The lender holds a lien, you own the home, and you can sell whenever you choose and pay the loan off from the proceeds. This is the most common misconception I correct, and correcting it changes the whole conversation.
Can I end up owing more than my home is worth?
No. HECMs are non-recourse loans insured by FHA. When the home is sold to repay the loan, neither you nor your heirs owe more than the home's value at that time. If the balance has grown past the value, the FHA insurance covers the difference. That protection is built into every HECM.
What happens to my house when I pass away?
Your heirs choose. They can keep the home by paying off the loan balance, sell it and keep any remaining equity, or walk away with no further obligation because the loan is non-recourse. There is a defined timeline, with extensions available while an estate settles. I encourage families to talk this through before anyone applies.
Is the counseling session really required?
Yes, by federal law, before you can apply. You meet with an independent HUD-approved counselor, not someone chosen or paid by the lender, and they confirm you understand the costs, obligations, and alternatives. I think the requirement is a good thing, and I often suggest adult children join the session.
Do I still pay property taxes and homeowners insurance?
Yes. Staying current on property taxes, homeowners insurance, and basic upkeep is a condition of every reverse mortgage, and the loan can be called due if they lapse. Underwriting includes a financial assessment to confirm you can carry them, and in some cases part of the loan is set aside to pay them for you.
Can my younger spouse stay in the home?
HUD rules protect an eligible non-borrowing spouse, allowing them to remain in the home after the borrowing spouse passes away, provided the protections were set up correctly at closing and the conditions are met. This is exactly the kind of detail that deserves a careful, unhurried review, and it is a standing item in every reverse conversation I have.
Is a reverse mortgage a last resort?
I do not treat it that way, and neither do most retirement researchers. Used deliberately, a HECM line of credit can protect retirement savings in down markets and stand by for care needs. Used desperately, it can hide a budget problem. Counseling plus an honest family review tells us which one we are looking at.
Start with a conversation, not an application
We talk it through, family welcome. Counseling comes before any application, and there is no pressure at any point.
MortgageOne Inc. is licensed for consumer mortgage lending in 41 states and Washington, DC. Chris Lamm is individually licensed in 19 states. Reverse mortgage borrowers must complete a counseling session with a HUD-approved counselor before applying. This material is not from HUD or FHA and has not been approved by HUD or any government agency.