Reverse Mortgage Loan Eligibility Requirements

To be eligible for a reverse mortgage loan, you and all borrowers who are co-owners of the home must be age 62 or older. You must own your home and live in it as your principal residence at least six months per year. Eligible properties include single-family homes, town-homes, and condominium units that are HUD approved.

You must have sufficient equity in your home to qualify

Determining whether or not there is sufficient equity in the home is an FHA calculation that takes into account:

  • Amount of all liens on the property
  • Age of youngest borrower
  • Location of the property
  • Current interest rate
  • Whether you choose a fixed or variable rate

You can use the online reverse mortgage loan calculator to find out if you have sufficient equity and what the loan principal limit would be.

Questions regarding eligibility

Can someone qualify if they have a mortgage?
Yes, however paying off your existing liens is a requirement for a reverse mortgage loan.  More than half of borrowers that take out a reverse mortgage use it to pay off their existing mortgage so they can stop making their monthly payments.  Borrowers will still have to pay taxes, ins, and maintenance on the property.

If a homeowner is not 62 but they are on permanent disability, can they qualify?
No. The FHA looks at age to determine reverse mortgage eligibility and make no exceptions for disability or Social Security status.

Do all 62-year olds who own their home qualify?
No. About one-third of homeowners who want to get a reverse mortgage are not eligible because they don’t have enough equity built up in their home. The younger the homeowner is, the more equity they need to have to qualify.

What happens if there isn’t enough home equity to qualify?
This is called a “shortfall.” This means that the reverse mortgage would not provide enough money to pay off the existing mortgage on the home — it is coming up “short.” In this situation, some homeowners choose to make up the difference by paying down the balance on their mortgage by the amount of the shortfall so that they can qualify for the reverse mortgage. However, most people who want a reverse mortgage and have a shortfall, do not have enough money to do this.