What is a HECM?
A Home Equity Conversion Mortgage is the most common type of reverse mortgage and is insured by the Federal Housing Administration. It is generally available to homeowners age 62 or older who meet program, property, occupancy, financial, and counseling requirements. The home remains in the borrower’s name, while interest and fees are added to the loan balance over time.
What changes—and what does not
| What changes | What continues |
|---|---|
| Eligible equity may be available through program-permitted payment options. | The borrower keeps title and must use the home as the principal residence. |
| No monthly mortgage payment is generally required. | Property taxes, homeowners insurance, maintenance, and other property charges remain the borrower’s responsibility. |
| Interest, mortgage insurance, and fees accrue and the loan balance generally grows. | The borrower must follow loan terms and keep the property in acceptable condition. |
| The loan becomes due when a maturity event occurs, such as the last borrower no longer occupying the home as a principal residence. | The homeowner and family still need a plan for future occupancy, sale, payoff, or heirs. |
A reverse mortgage is a loan secured by the home. The Department of Veterans Affairs does not offer reverse mortgages. Be cautious with advertising that suggests special VA-approved reverse mortgage benefits.
Core HECM requirements to discuss
- Each borrower is age 62 or older. A non-borrowing spouse may be younger, subject to program rules, protections, and limitations.
- The home is the borrower’s principal residence and meets property requirements.
- Existing liens can be paid off at closing with available proceeds and/or other funds.
- The borrower can meet ongoing property charges and maintenance responsibilities.
- A required session is completed with a HUD-approved HECM housing counselor before the loan proceeds.
- The lender completes a financial assessment and full program review.
What determines available proceeds?
Proceeds depend on factors including the age of the youngest eligible borrower or non-borrowing spouse as applicable, current interest rates, the home’s value up to program limits, existing liens, costs, and the payment plan selected. An estimate should show what pays off existing debt, what covers costs, what remains available, and how the balance may grow.
Bring the family plan into the room
- Who owns the home, who will be a borrower, and who lives there?
- Is there a spouse who may not be a borrower, and how do protections and limitations apply?
- What happens if the homeowner moves permanently or needs extended care elsewhere?
- Do heirs hope to keep the home, sell it, or use other assets to repay the loan?
- Would downsizing, a home equity loan, HELOC, traditional refinance, sale, or expense change better support the goal?
What to gather
Questions worth asking
- How much would be available after liens, mortgage insurance, and other costs?
- Which payout structures are available, and how do they change access and the future balance?
- What property charges must remain current, and how will the lender assess them?
- What events make the loan due and payable?
- How could a non-borrowing spouse or heirs be affected?
- What alternatives should be reviewed before deciding?
A reverse mortgage review for California homeowners
For an Oceanside or California homeowner, a useful review starts with age, title, principal-residence status, property type and condition, existing liens, estimated value, taxes, insurance, HOA obligations, household cash flow, and the family’s longer-term plans. HECM counseling with a HUD-approved agency is required, and alternatives should be discussed before deciding.
Common questions
Does the lender own my home?
No. The borrower retains title, subject to the reverse mortgage lien and the obligation to follow the loan terms.
Can I stop paying taxes and insurance?
No. Property taxes, homeowners insurance, maintenance, and other required property charges remain important borrower obligations.
Must I complete counseling?
For a HECM, counseling with a HUD-approved housing counseling agency is required before receiving the loan.
What happens to the balance?
Interest and fees are added over time, so the amount owed generally rises and remaining equity generally falls.