1. What is a reverse mortgage?

A reverse mortgage allows eligible homeowners to borrow against home equity. You retain ownership of your home, subject to the mortgage and its requirements.

Rather than requiring regular monthly principal-and-interest payments on the reverse mortgage, repayment is generally deferred until an event specified in the loan agreement. Interest and applicable charges can accumulate, increasing the amount owed.

You still have responsibilities. These include applicable property taxes, insurance, maintenance, occupancy and other loan obligations. Failure to meet the requirements can make the loan due and may lead to foreclosure.

If a proprietary second-lien reverse mortgage leaves an existing first mortgage in place, that first mortgage’s payments and obligations continue.

2. What is a HECM?

HECM stands for Home Equity Conversion Mortgage. It is a reverse mortgage insured by the Federal Housing Administration, which is part of the U.S. Department of Housing and Urban Development.

HECMs follow HUD requirements covering eligibility, property standards, financial assessment, counseling, mortgage insurance and borrower protections.

FHA insurance does not mean automatic approval, unlimited proceeds or freedom from borrower obligations. It also does not mean Goff Housing Solutions or Stan Goff is “FHA-approved.”

CFPB: Reverse mortgage key terms

3. What is a proprietary reverse mortgage?

A proprietary reverse mortgage is a private reverse mortgage that is not insured through the FHA HECM program.

These programs can differ materially from HECMs—and from one another. Differences may involve eligible ages, property types, borrowing capacity, costs, ways to receive funds and protections for spouses or heirs.

Proprietary does not simply mean “a larger HECM.” Depending on current availability, private programs may include first-lien structures or second-lien structures that potentially allow an existing first mortgage to remain.

A first lien has priority over a second lien. If considering a second-lien option, review both loans together, including the existing mortgage payment, total debt and obligations.

Program availability must be checked for your particular situation.

4. HECM vs. Proprietary — a homeowner’s comparison

The comparison should continue beyond the amount initially available. Costs, obligations and family considerations may matter just as much.

5. Why home value can matter

HECM calculations use a property-value limit established under HUD rules. A home’s value above that limit does not automatically produce additional HECM borrowing capacity.

The HECM maximum claim amount is a calculation factor. It is not a promise of the loan amount or cash you will receive.

For a higher-value home, comparing a proprietary program may be worthwhile. But a higher home value does not guarantee that a proprietary loan will provide more usable funds or be the better choice.

Compare the amount available after existing mortgage payoffs, closing costs and any required reserves—not just a headline borrowing figure.

6. Age and eligibility differences

HECM borrowers must be at least 62. A younger spouse may have a different status under HECM rules, which needs careful review.

Proprietary programs may use different age requirements. Those requirements should be confirmed against current program guidelines rather than assumed from the word “reverse mortgage.”

Age alone does not establish eligibility. Homeownership, equity, property condition, occupancy, financial circumstances and other requirements also matter.

CFPB: Reverse mortgage eligibility

If your circumstances do not fit one program, that is a reason to review alternatives—not a promise that another program will accept them.

7. Credit, financial history and bankruptcy — why review matters

A credit concern or bankruptcy history should not be reduced to an automatic “yes” or “no.”

For a HECM, financial assessment considers the borrower’s ability and willingness to meet ongoing obligations. Payment history, income, expenses and documented circumstances can matter. Some situations may require funds to be reserved for property charges.

Proprietary programs have separate financial-review requirements. A private program is not automatically more lenient, and a HECM is not automatically unavailable because someone has experienced financial difficulty.

Bankruptcy review may depend on its type, status, timing, payment history, required permissions and the selected program’s rules.

The appropriate starting point is program-specific review. Neither poor credit nor bankruptcy guarantees qualification or disqualification.

HUD: HECM financial assessment

8. Property eligibility

A home that qualifies for one mortgage program may not qualify for another.

HECM property review follows applicable FHA standards. Proprietary review follows the selected private program’s requirements. Neither should be assumed to accept every property that the other accepts.

Property type, condition, title, foundations, condominium status and documentation may affect the review. Repairs or additional records may be necessary.

Before relying on an estimate, ask whether the specific property has been considered—not merely its estimated value.

9. Proceeds, lump sum, payments and line-of-credit structures

The way you receive funds can affect how useful a reverse mortgage is for your goals.

Depending on the product, available arrangements may include a lump sum, scheduled advances, a line of credit or a combination.

HECM choices depend on the loan’s rate structure. Fixed-rate and adjustable-rate HECMs do not offer identical arrangements. Proprietary choices depend on the particular program.

Scheduled advances are borrowed funds, not earned income. A line of credit is borrowing capacity, not a savings account. Any growth feature must be explained according to that loan’s terms; a HECM credit-line feature should not be assumed to apply to a proprietary product.

CFPB: Reverse mortgage discussion guide

Ask how much is available initially, what remains available later, and what conditions affect access.

10. Costs, mortgage insurance and the growing loan balance

Compare both upfront and ongoing costs.

These may include origination charges, appraisal and closing costs, interest, applicable servicing charges and other program-specific expenses. HECMs also include FHA mortgage insurance premiums. Proprietary programs do not carry HECM FHA premiums, but that does not make them cost-free or automatically less expensive.

When interest and charges are added to the loan rather than paid, the balance grows. Drawing more funds also increases the amount owed.

A growing balance can reduce the equity available for a future move, sale or inheritance. Future home appreciation should not be treated as guaranteed.

Ask for illustrations showing how the balance and remaining equity could change over time.

11. Counseling

HECM counseling generally must be completed with a HUD-approved reverse mortgage counseling agency. Certain qualifying HECM refinances may meet the conditions for a counseling waiver; it should not be assumed.

HUD: HECM refinance counseling-waiver requirements

Proprietary counseling requirements depend on the program and applicable law. They should be verified separately.

Counseling offers an opportunity to discuss costs, obligations, alternatives and family concerns. It does not replace underwriting or guarantee approval.

GHS education complements this process; it does not substitute for required counseling.

12. Spouses, heirs and non-recourse protections

Family protection deserves specific questions before closing.

A co-borrower and a non-borrowing spouse have different roles. Under HECM rules, an eligible non-borrowing spouse may qualify for a repayment deferral after the borrower’s death, subject to conditions. That spouse does not automatically gain access to additional loan advances.

Other family members do not receive those protections simply because they live in the home.

HECMs include non-recourse protection, limiting recovery to the home rather than other assets for a covered loan shortfall. For a proprietary loan, review the non-recourse terms and how applicable protections operate; do not assume every FHA procedure applies.

Heirs may have options to retain or sell the home, but keeping it generally requires satisfying the loan. Servicer notices, deadlines, valuations and available extensions need timely attention.

CFPB: What happens after a reverse mortgage borrower dies

Repayment can also arise from a sale, a permanent move or failure to meet loan obligations. The presence of a surviving borrower or eligible spouse can affect the outcome.

13. Existing-home, Purchase and Refinance use cases

These describe how a homeowner might use a loan. They are not three separate reverse mortgage program categories.

Existing home: Compare accessing equity, addressing existing mortgage debt and preserving funds for future needs. If considering a second-lien proprietary structure, include the continuing first-mortgage payment in the household budget.

Purchase: HECM for Purchase and available proprietary purchase programs have separate requirements. Buyer funds, approved funding sources, transaction costs and property eligibility must be reviewed. Explore reverse mortgages for purchase.

Refinance: Replacing an existing reverse mortgage creates a new loan with new costs and terms. Compare the benefit with those costs, changes to protections and the effect on remaining equity. Increased borrowing capacity alone does not establish that refinancing is worthwhile. Explore reverse mortgage refinancing.

14. Manufactured-home considerations

Manufactured homes require property-specific review.

For HECMs, applicable FHA requirements govern eligibility. For proprietary reverse mortgages, documentation and property requirements vary by program and lender.

Manufacture date, identification records, foundation, title and property classification may need attention. Missing documentation calls for review; it does not support a blanket conclusion about every available program.

Manufactured and modular homes should not be treated as interchangeable. Learn more about reverse mortgages for manufactured homes.

15. Questions to ask before choosing a program

• Why are we considering this program for my situation?
• Which eligibility and property requirements still need verification?
• How much would remain after debt payoffs, costs and required reserves?
• How and when could I access the funds?
• What expenses and payments would I still owe?
• How could the loan balance change over time?
• What happens if I move, need extended care or pass away?
• What protections apply to my spouse and heirs?
• What counseling is required?
• If this is a second lien, what happens to my existing mortgage?
• What alternatives should I compare, including keeping my current arrangement?

Ask for answers in writing and explanations you can understand.

16. Frequently asked questions