What is a Reverse Mortgage?
Posted By Lindsay Byrne on Jan 04, 2023

Normally with a conventional loan, a person will take out a loan to pay for their new home, and over a period of time they will pay the lender back. However, a reverse mortgage allows senior homeowners to borrow a part of their home’s equity—typically if they have paid off their mortgages on their home, and use it for things like healthcare costs, home renovations, debt consolidation, or additional income to meet monthly expenses. You must be at least 62 years old to be eligible for a reverse mortgage. Homeowners also cannot have a second mortgage and they should own their property outright. It is a great option for homeowners who have run out of savings and/or sources of income when they are older.


The most common type of reverse mortgage is the Home Equity Conversion Mortgage (HECM) which is backed by the Federal Housing Administration. If you are interested in a reverse mortgage, it is important to note that there are several ways you can receive your equity payments. The types of equities that you can choose are lump sum, equal monthly payments (annually), term payments, line of credit, equal monthly payments plus a line of credit, or term payments plus a line of credit.


Like all loan processes, the reverse mortgage process has many boxes to check off before a homeowner can receive the loan. Once the borrower applies for a reverse mortgage loan, the lender will make sure they have all the necessary criteria needed to fund their loan. When the borrower receives the loan, they must use the loan as specified in the loan agreement. Some reverse mortgages have restrictions on how the loan can be spent, while others may not have any restrictions for their spending whatsoever. There is also a principal limit on how much can be borrowed by the homeowners which is based on the age of the youngest borrower or based on the non-borrowing spouse, the home’s value, and current interest rates. One other advantage is that even if there is a drop in the market or the borrower stays in the home longer than expected, the borrower will not be required to pay the difference since the program is backed by insurance.


There are so many loan options out there today, but when it comes to senior homeowners, a reverse mortgage is one of the best options. Visit to see more Reverse loan facts and information and to get connected with one of our Reverse Loan Specialists today who can assess if a reverse mortgage is right for you!



*This material has not been reviewed, approved or issued by HUD, FHA or any government agency. The company is not affiliated with or acting on behalf of or at the direction of HUD/FHA or any other government agency.

This information is provided for convenience only, and Family First Funding LLC and its affiliates (“FFF”) make no warranties concerning the accuracy or completeness of any of the information. Information is subject to change without notice, and FFF is under no obligation to provide updated information. This is not financial, tax, compliance or legal advice and should not be taken or relied upon as such. Each individual should consult with his/her financial, tax, compliance or legal professional. Mention of product, process or service shall not be construed as an endorsement or recommendation by FFF.

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