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Freddie Mac weekly average: 30-yr fixed 6.71%, 15-yr fixed 6.04%. Not a quote, no APR published. See /rates.

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Loan type

Reverse mortgage

A reverse mortgage lets homeowners 62 and older turn home equity into cash with no monthly mortgage payment. The loan is repaid when the last borrower leaves the home. This is a big financial decision that affects your heirs, so take your time.

Talk to a HUD-approved counselor first

Who this is for

  • Homeowners 62 or older, though some private programs allow age 55.
  • Owners with a lot of equity who plan to stay in the home for years.
  • People who have talked it through with family and a HUD-approved counselor, since this counseling is required by law.

How it works, step by step

  1. The most common type is the FHA-insured HECM, short for Home Equity Conversion Mortgage, and you must meet with a HUD-approved counselor before you apply.
  2. Your proceeds depend on your age, your home's value, and current rates, so younger borrowers get less money.
  3. You still pay property taxes, insurance, and upkeep, and falling behind can lead to foreclosure.
  4. Compare closing costs carefully, since up-front mortgage insurance and origination fees add up fast.

Pros

  • No monthly principal and interest payment is ever required.
  • It is non-recourse, meaning you or your heirs never owe more than the home is worth.
  • The money you get counts as a loan advance, not taxable income.

Cons

  • Your equity shrinks every year as interest builds up on the balance.
  • High up-front costs compared with other loan types.
  • Heirs must repay the loan or sell the home to keep it.
  • Taxes, insurance, and upkeep remain your job the whole time.