Learn how to determine your eligibility for a reverse mortgage with essential criteria including age, home equity, residence status, and mandatory counseling. Understand property conditions and financial considerations involved in qualifying for this retirement financial solution.

How to Determine if You Qualify for a Reverse Mortgage

A reverse mortgage is different from a standard mortgage where you make monthly payments to own your home. Instead, lenders provide tax-free payments based on your home's equity, which generally do not require repayment as long as you live in the property.

To qualify for a reverse mortgage, consider these main criteria:

Age Limit

You need to be at least 62 years old. Recent rules also permit some exceptions for non-borrowing spouses under specified conditions.

Home Equity

A minimum of 50% equity is necessary to ensure sufficient value for the loan.

Main Residence

Your home must be your primary residence and occupied by you. Investment properties are ineligible for reverse mortgages.

Pre-Loan Counseling

Applicants must attend a counseling session with a HUD-approved agency. This helps you understand the loan’s features and determine if it suits your needs.

Additional property requirements include:

The property should be owner-occupied, including FHA-approved condos, multi-family units up to four units, single-family homes, and townhouses.

It must be well-maintained, in good condition, pest-free, with functioning utilities and security systems.

An appraisal by a licensed professional will establish its current market value.

Financial considerations are also essential:

Your income should cover property taxes, insurance, and HOA fees.

Lenders may review your credit report to assess your overall financial health and debts.

Remember, reverse mortgages offer a way to access retirement funds but come with specific points:

Typically, no extra fees or charges are added upfront.

Interest rates can fluctuate, impacting the total debt over time.

Interest accrues on the loan amount, increasing your owed balance.

Interest isn’t tax-deductible unless the loan is paid off.

If your spouse isn’t listed on the loan, they can often stay in the home after your passing, as long as household expenses are maintained.