How to Qualify for a Reverse Mortgage

May 7th 2016

Reverse mortgages are not for everyone. Talk to a certified financial planner or a loan specialist through the Department of Housing and Urban Development to determine if a reverse mortgage can help you financially.


The most important qualification is your age. You must be 62 years old or older. The age of the youngest co-borrower, or the age of your spouse living with you, determines the maximum amount you receive.

Own Your Home Outright

You must own your home outright, or pay off your existing mortgage with the proceeds of the loan, to qualify for a reverse mortgage. Any proceeds that remain after you pay off the traditional mortgage go towards whatever bills you want to pay. The money you receive depends on the appraised value of your home rather than the mortgage payments you made previously.

Primary Residence

You must live in the home with the equity for the loan. The property can have single-family status, or it can contain two to four units with the owner living in one unit. If you pass away, your spouse can continue living in the home. Anyone not listed as a co-borrower may have to move out of the residence if you die before the reverse mortgage is paid fully.

Financial Status

You must prove you can pay annual property taxes, utility bills and homeowners insurance premiums. Before you qualify, a certified financial counselor examines your income, your debts and your bank accounts to determine if you meet financial obligations without any hardship. Include benefits such as Social Security, disability and retirement as part of your income. Your financial status also helps lenders discover how well you pay back the reverse mortgage.

What You Can Get

The maximum reverse mortgage amount you can earn represents the lesser amount of $625,000 or 52.6 percent of your home's value. The percentage includes loan fees. Older homeowners may earn higher percentages. You can cash out as much as 60 percent of the reverse mortgage in the first year of the loan. You have seven options to disburse your funds, depending on the type of reverse mortgage you get.


A reverse mortgage presents a way for senior citizens to take advantage of the equity built up in a home to qualify for a loan. People who obtain this loan can pay bills, buy a new car, get help with medical expenses or use the money for any purpose. The Department of Housing and Urban Development backs these loans, officially known as home equity conversion mortgages. A reverse mortgage has different qualifications than a traditional mortgage program.

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