Borrowers must be 62 years of age or older, and own and reside in the property as their primary residence. Borrowers must continue to live in the home as their primary residence throughout the life of the loan. They must also meet with a HUD-certified Reverse Mortgage Counselor prior to applying for a Reverse Mortgage loan.

Additionally, the property must also meet certain eligibility requirements. The property must be a single-family home, a two – four unit owner-occupied house, a HUD-approved condominium, or a manufactured home that meets FHA requirements. With a HECM, the borrower is required to pay an initial Mortgage Insurance Premium (MIP) of 2.0% of the property value up to the Max Claim Amount (whichever is less). The current max loan amount is $822,375 (January 2021). The insurance renewal amount is 0.5 percent charged annually on the outstanding balance of the loan. The borrower must also pay title insurance, state, and county recordation tax, and other closing costs, typically found in any mortgage transaction. In some cases, an origination fee may be charged. This is something to consider when comparing lenders.

When used correctly, a Reverse Mortgage can be a useful tool when planning for retirement income and can be a part of the larger retirement income planning conversation with your financial planner or other trusted financial advisor. As part of overall retirement income planning, a Reverse Mortgage can be a useful tool to address or resolve many of the Major Concerns of Income Planning, such as out-living your assets, maintaining your desired overall standard of living, having assets available during down markets if needed and having assets to assist with long term care expenses.