What Are Reverse Mortgage Eligibility Requirements?
Eligibility requirements can vary depending on the type of loan and the lender. HECMs have the following requirements:
- You must be at least 62. You cannot qualify if you are younger, even if you are retired or are disabled.
- The property must be your primary residence. You must be living in the property 51% of the calendar year. It can’t be a vacation or second home.
- Your home must be paid off or have a low mortgage balance. The government requires that the reverse mortgage has first-lien position. This means your home must be paid off before you take out the reverse mortgage, or the reverse mortgage proceeds must be enough to pay off your remaining home loan.
- You must be able to afford future housing costs. The lender will verify whether you can continue paying the housing costs, including taxes, homeowners insurance and maintenance, after you take out the reverse mortgage. If you can’t keep up with these payments, you could lose your home to foreclosure.
- You must have no delinquent federal debt. If you are delinquent on federal debt such as taxes or an FHA-insured mortgage, you cannot take out a reverse mortgage until the issue is resolved. You either need to pay off the debt or enter a valid payment plan so the debt is no longer delinquent.
- You must satisfy property requirements. Not every property is eligible for a reverse mortgage. Single-family homes are eligible. If you own a multifamily home, it can be no more than four units, and you must live in one of the units. Manufactured homes and condominiums can be eligible if they meet HUD requirements.
- Meet with a HUD-approved counselor. You will be required to speak with a HUD-approved counselor, either by phone or in-person, about the financial consequences of taking out an HECM. Together, you will analyze your situation and consider alternatives to a reverse mortgage.
If your income is below 200% of the poverty line, the HUD counselor is required to see whether you qualify for any type of government help. If your income is above this level, ask the counselor to check on your behalf because they won’t do it automatically. You might be eligible for benefits you don’t know about. For example, a veteran discovers they are eligible for a housing grant through the VA.
If you are married, you and your spouse should both be listed as co-borrowers on the reverse mortgage so that if one spouse dies or has to move out for medical reasons, the other can continue living in the property and receiving money from the reverse mortgage.
However, this may not be possible if one spouse is younger than 62, the minimum age to take out an HECM reverse mortgage. In this case, only the spouse who is 62 or older can be listed as a borrower.
On Aug. 4, 2014, the govenment launched new protections for nonborrowing spouses. The spouse not listed on loan documents can continue living in the home after the borrowing spouse dies, provided that:
- They were married before the reverse mortgage was taken out.
- The nonborrowing spouse was named in the reverse mortgage documents.
- The surviving spouse occupies the house as a primary residence.
- The borrowing spouse must certify marriage to the nonborrowing spouse at the loan closing and each subsequent year.
If the nonborrowing spouse is 62 or older after the borrowing spouse dies, he or she also could refinance the reverse mortgage loan to continue living in the property. Start your online application today!