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A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence or fail to meet the obligations of the mortgage.

Yes. You can also use a HECM to purchase a primary residence if you are able to use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you are purchasing.

Federal Housing Adminstration (FHA) limits allow you to borrow up to 70% of the new home’s appraised value or purchase price, whichever is less. Generally, buyers are able to borrow between 50% and 70% of the new home’s value depending upon their age.

If you’re 62+ and have enough cash on hand or from the sale of your existing home to make a 30% to 50% downpayment on your new home, you can qualify.

A HECM loan must be repaid in full when you die or sell the home. The loan also becomes due and payable if

• You do not pay property taxes or hazard insurance or violate other obligations.
• You permanently move to a new principal residence.
• You, or the last borrower, fail to live in the home for 12 months in a row. An example of this situation would be if you (or the last borrower) were to have a 12-month or longer stay in a nursing home.
• You allow the property to deteriorate and do not make necessary repairs.

When you sell your home, you or your estate will repay the cash you received from the reverse mortgage plus interest and other fees, to the lender. The remaining equity in your home, if any, belongs to you or to your heirs. With a HomePlus HECM mortgage, you or your estate can never owe more than the value of your home.

With a traditional second mortgage, or a home equity line of credit, you must have sufficient income versus debt ratio to qualify for the loan, and you are required to make monthly mortgage payments. The reverse mortgage is different in that it pays you, and is available regardless of your current income. The amount you can borrow depends on your age, the current interest rate, and the appraised value of your home, sales price or FHA's mortgage limits, whichever is less. Generally, the more valuable your home is, the older you are, the lower the interest, the more you may borrow.

With a HECM, you don't make monthly principal and interest payments, the lender pays you according to the payment plan you select. Like all homeowners, you still are required to pay your real estate taxes, insurance and other conventional payments like utilities. With an FHA HECM you cannot be foreclosed or forced to vacate your house because you "missed your mortgage payment."

No, a reverse mortgage cannot be outlived. As long as at least one homeowner lives in the home as their primary residence and maintains the home in accordance with FHA requirements (keeping taxes and insurance current) the loan does will not become due.

A reverse mortgage is “non-recourse” meaning you as the borrower are not personally responsible to repay the loan. Loan repayment will come from the sale of the home by your or your estate. In the event the loan value is higher than the home value, the loan will be considered paid in full by the proceeds from the home’s sale.