Introduction
For many retirees in the United States, their home is their biggest asset. But while home value may be high, monthly retirement income may be limited.
A reverse mortgage allows homeowners aged 62 or older to convert part of their home equity into cash — without selling their home.
In this 2026 guide, we explain how reverse mortgages work, eligibility rules, benefits, risks, and alternatives.
What Is a Reverse Mortgage?
A reverse mortgage is a loan available to homeowners aged 62+ that allows them to:
- Borrow against home equity
- Receive tax-free cash
- Stay in their home
- Not make monthly mortgage payments
Instead of paying the lender, the lender pays you.
The most common type is a government-backed Home Equity Conversion Mortgage (HECM).
How Does a Reverse Mortgage Work?
Here’s the simple process:
- Homeowner applies and qualifies
- Home is appraised
- Loan amount is determined
- Funds are received as:
- Lump sum
- Monthly payments
- Line of credit
- Combination of options
The loan is repaid when:
- The homeowner sells the home
- Moves permanently
- Or passes away
Who Qualifies?
To qualify in 2026, you typically must:
- Be at least 62 years old
- Own the home outright or have significant equity
- Live in the home as primary residence
- Complete HUD-approved counseling
Financial assessment is required to ensure ability to pay property taxes and insurance.
How Much Money Can You Get?
The loan amount depends on:
- Age of borrower
- Home value
- Current interest rates
- Type of payout option
Older borrowers generally qualify for higher loan amounts.
Pros of Reverse Mortgage
- No monthly mortgage payments
- Stay in your home
- Tax-free cash
- Flexible payout options
- Non-recourse loan (you never owe more than home value)
Cons of Reverse Mortgage
- High upfront fees
- Interest accrues over time
- Reduces home equity
- May impact inheritance
Understanding long-term impact is critical before applying.
Costs and Fees
Reverse mortgages include:
- Origination fee
- Mortgage insurance premium
- Closing costs
- Servicing fees
Total costs can be significant compared to traditional loans.
Always request full fee breakdown before signing.
Is Reverse Mortgage Safe?
Yes — if:
- It is FHA-insured HECM
- You work with licensed lender
- You complete required counseling
However, it must be used responsibly.
Alternatives to Reverse Mortgage
Before applying, consider:
- Downsizing home
- Home equity loan
- Refinancing mortgage
- Selling and renting
- State assistance programs
Sometimes simpler options may be more cost-effective.
When Reverse Mortgage Makes Sense
It may be suitable if:
- You plan to stay long-term
- You need retirement income support
- You have significant home equity
- You don’t rely on home as inheritance
Every situation is unique.
Frequently Asked Questions
Do I lose ownership of my home?
No. You remain the owner as long as you meet loan conditions.
Can heirs keep the home?
Yes. They can repay the loan balance and keep the property.
Is reverse mortgage income taxable?
No. Funds are generally considered loan proceeds, not income.
Final Thoughts
A reverse mortgage can provide financial flexibility for seniors, but it is not a one-size-fits-all solution.
Before making a decision:
- Compare lenders
- Understand total costs
- Discuss with family
- Seek independent financial advice
Used wisely, it can help improve retirement stability.