Unlock your home’s hidden equity with a HECM
A HECM reverse mortgage is the retirement solution for people looking to free up funds by accessing the money in their home—while continuing to live in it.
What a HECM can do for you
Eliminate monthly mortgage payments
Replaces your existing mortgage and does not need to be repaid until you leave the house*. This frees up your old monthly payment as usable cash.
Income tax-free† loan proceeds
Use these funds the way you like to meet needs, prepare for the future, and achieve goals.
Greater financial flexibility
Receive a lump sum, draw cash monthly, or establish a line of credit that doesn’t require monthly payments.*
Stay in your home
Use your stored-up housing wealth to live comfortably and maintain your standard of living long-term.
How a HECM
Dan and Maria feel like their years of hard work paid off.
For illustrative purposes, let’s look at a hypothetical situation. After paying into their house for years, Dan and Maria found a way to use that equity to better secure their retirement. A Home Equity Conversion Mortgage (HECM) is helping them enjoy retirement with greater financial independence. They now have one less monthly expense—plus, the line of credit can grow over time and cannot be frozen as long as the loan has not matured or a default has not occurred.
HECM by the numbers
Free up cash and plan ahead.
With a HECM, Dan and Maria no longer have to make a monthly mortgage payment* which allows them to live how they want to during the best years of their lives. There’s enough to renovate their home today and leave the balance in a growing line of credit for in-home care costs down the road.
Scenario is for illustrative purposes only. For loan assumptions and additional disclosures related to this scenario, click here.
Loan terms potentially available to a borrower are based on factors such as loan product, home value, mortgage payoffs, location, borrower age, interest rate and payment option selected, and borrower’s credit profile.
The reverse mortgage borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance, and any homeowners association fees. The borrower must maintain the home. If the borrower does not meet these loan obligations, then the loan will need to be repaid.
How much depends on multiple factors, including the age of the youngest borrower or non-borrowing spouse, your home’s value, the amount of equity, FHA lending limits, the current interest rate, and the reverse mortgage product and payment option you choose. A FAR Reverse Mortgage Specialist can give you a free quote that’s tailored to your specific situation.
To be eligible for a HECM reverse mortgage, you must meet the following criteria:
- You must be age 62 or older.
- The home must be the borrowers’ principal residence.
- The home must meet Federal Housing Authority (FHA) minimum property standards and flood requirements.
- The home must be one of the following property types: single-family home; a two-to-four-unit home with one unit occupied by the borrower; or a HUD-approved condominium. With new construction, you must have a Certificate of Occupancy or equivalent before you apply.
- You must have sufficient home equity. A Reverse Mortgage Specialist from Finance of America Reverse LLC (FAR) can tell you if you have enough home equity to qualify.
In addition to confirming qualifications, our Reverse Mortgage Specialists can help you find out if a HECM is right for your personal situation and understand f the loan details.
A HECM reverse mortgage is a loan that enables homeowners and homebuyers age 62* and older, to convert some of their home equity into cash, installment payments, or a line of credit. Some loans also let homeowners finance a new home purchase. With a reverse mortgage, you make no monthly mortgage payments. You continue to live in and own your home as long as you uphold the terms of the loan.
Unlike a traditional home equity loan or Home Equity Line of Credit (HELOC), you don’t have to repay a reverse mortgage until the home is sold or the last surviving borrower (or a non-borrowing spouse who meets certain requirements) no longer lives in the home. The homeowners must maintain the condition of the home and stay current with other property costs, including but not limited to taxes and hazard insurance, or else the loan will be called due.
*The age minimum is different for FAR proprietary loans like HomeSafe and EquityAvail unless you reside in a state that maintains the minimum at age 62 for all FAR loans—North Carolina, Texas, or Utah.
- The amount of loan proceeds is determined by the age of the borrower and appraised value of the home.
- A financial assessment determines your long-term ability to pay taxes and insurance.
- Undergo required counseling from a HUD-approved agency to answer questions.
- Loan proceeds pay off your current mortgage.
- Cash can be a lump sum, and you can get the remainder as installment payments or a line of credit. The unused portion grows every month, providing a significant cushion for the future (as long as the loan has not matured or a default has not occurred).
- Don’t forget to continue to pay your property charges, such as taxes and insurance and any homeowners association fees.
- With room in your budget after eliminating monthly mortgage payments and more cash in hand (or a growing line of credit), create the retirement you always wanted.
*The reverse mortgage borrower must meet all loan obligations, including living in the property as the principal residence and paying property charges, including property taxes, fees, hazard insurance. The borrower must maintain the home. If the borrower does not meet these loan obligations, then the loan will need to be repaid.
†Not tax advice. Consult a tax professional.