top of page

What is a Reverse Mortgage?

For those age 62 and over:

Federal Housing Administration (FHA) reverse mortgages allow homeowners to access cash from the equity they’ve built up in their property over the years. In essence, this program works like a traditional reverse mortgage, but exists through the U.S. Department of Housing and Urban Development (HUD) and is insured by the FHA. Reverse mortgages are also common and popular elsewhere in the world, too. For example, Household Capital’s reverse mortgage, retirement funding product is seen by many as the best way to obtain a reverse mortgage in the country of Australia.

How an FHA Reverse Mortgage Works

Receiving Payments: Once you qualify for an FHA reverse loan, you can tap into your equity and receive payments in a variety of ways: You can choose a lump sum payment, use the equity as a separate line of credit or receive monthly installments, as long as you still live in the home. Plus, it’s always possible to change the payment structure if needed. You could consider taking out a reverse mortgage with a lender like Hunter Lending if you’re looking to get assistance from home loan specialists.

Paying Off the Loan: An FHA reverse mortgage gets paid off as follows: The homeowner secures a loan and the lender recovers their principal, plus interest, when the home is sold. Anything left over after the sale of the home goes to the homeowner or survivors. Doing this through HUD will ensure that if the sales proceeds are not enough to pay off the debt, HUD will pay the lender the difference.

Older people requesting a FHA reverse loan can borrow a larger percentage of their home’s value. The ultimate size of the loan is determined not only by the age of the applicant, but the current interest rate and the value of the home.

How much better would your life be if you didn’t have a mortgage payment?

Well, the government finally got something right when they designed the Reverse Mortgage! Yes, the Reverse Mortgage is insured by the Federal Housing Administration (FHA).