Last reviewed: 6 October 2026
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What a reverse mortgage (HECM) is, and the rules behind it
A reverse mortgage works in the opposite direction from a traditional one: the balance grows instead of shrinking. This page sets out how the CFPB and HUD’s regulation describe the most common type, the Home Equity Conversion Mortgage.
What this term means: A HECM is, per the CFPB, the most common type of reverse mortgage today, and it is federally insured by the Federal Housing Administration (FHA).[4] The CFPB says its information on this topic applies only to HECMs.[1] A principal residence is the property where the borrower maintains a permanent home and typically spends the majority of the year.[4]
How the CFPB describes the loan
- Like a traditional mortgage, a reverse mortgage lets homeowners borrow using their home as security, and the title to the home remains in the borrower’s name.[1]
- Unlike a traditional mortgage, borrowers do not make monthly mortgage payments. The loan is repaid when the borrower no longer lives in the home.[1]
- Interest and fees are added to the loan balance each month and the balance grows, so home equity decreases as the balance rises.[1]
- Borrowers must pay property taxes and homeowners insurance, use the property as their principal residence, and keep the house in good condition.[1]
- The CFPB says a reverse mortgage “is not free money”: borrowed money plus interest plus fees each month equals a rising loan balance, and the homeowners or their heirs will eventually have to pay it back, usually by selling the home.[1]
Who can get a HECM
The CFPB lists these requirements.[2]
| Requirement | What the sources say |
|---|---|
| Age | HECMs are available only to homeowners who are 62 and older.[2] HUD’s regulation says the youngest borrower must be 62 or older at the time of loan closing.[5] |
| Occupancy | The home must be your principal residence, meaning you live there the majority of the year.[2] |
| Existing mortgage | You must own the home outright or have a low mortgage balance that you can pay off at closing, using your own funds or money from the reverse mortgage.[2] |
| Federal debt | You cannot owe federal debt, such as federal income taxes or federal student loans, though you may use reverse mortgage money to pay it off.[2] |
| Ongoing costs | You must have enough of your own money, or agree to set aside part of the loan funds at closing, to pay property taxes, insurance, maintenance and repairs.[2] |
| Property condition | The home must be in good shape. If it does not meet the required standards, the lender will tell you what repairs are needed first.[2] |
| Counseling | You must receive counseling from a HUD-approved reverse mortgage counseling agency to discuss eligibility, the financial implications and other alternatives.[2] |
Our guides to the counseling requirement and the Financial Assessment cover two of these steps in detail.
When the loan must be repaid
The CFPB says a reverse mortgage typically must be repaid when you move out of the home or die, and may have to be repaid sooner if the home is no longer your principal residence, you do not pay your property taxes or homeowners insurance, or you do not keep the home in good repair.[3] A HECM must be paid off when the last surviving borrower or Eligible Non-Borrowing Spouse dies, sells the home, or no longer lives in it as a principal residence.[3]
HUD’s regulation, 24 CFR § 206.27(c), says the mortgage must state the balance is due and payable in full if a borrower dies and the property is not the principal residence of at least one surviving borrower, or if a borrower conveys all title and no other borrower retains title, with deferral for an Eligible Non-Borrowing Spouse.[6] It must also state the balance is due and payable, upon approval of the HUD Commissioner, if the property ceases to be a borrower’s principal residence for reasons other than death and is not the principal residence of at least one other borrower, if a borrower fails for longer than 12 consecutive months to occupy the property because of physical or mental illness and no other borrower lives there, if property charges are not paid, or if an obligation under the mortgage is not performed.[6]
The CFPB adds that if you are away for more than 12 consecutive months in a healthcare facility and no co-borrower lives in the home, anyone living with you will have to move out unless they can pay back the loan or qualify as an Eligible Non-Borrowing Spouse.[3] Our guide to a non-borrowing spouse covers that term.
No personal liability for the balance
Under § 206.27(b)(8), the borrower “shall have no personal liability for payment of the outstanding loan balance,” the mortgagee “shall enforce the debt only through sale of the property,” and the mortgagee may not obtain a deficiency judgment against the borrower if the mortgage is foreclosed.[6]
Cancelling after closing
The CFPB says that with most reverse mortgages you have a three-business-day right to cancel for any reason without penalty, known as the right of rescission. To cancel you must notify the lender in writing; the CFPB suggests certified mail with a return receipt. After you cancel, the lender has 20 days to return any money you paid for the financing.[1]
Scams the CFPB warns about
The CFPB warns about contractors who approach you about getting a reverse mortgage to pay for repairs. It also says the Department of Veterans Affairs does not offer any reverse mortgage loans, and that some ads falsely promise veterans special deals or imply VA approval.[1] Our reverse mortgage scams checklist goes further. For how a HECM differs from a home equity loan or line of credit, see HECM, HELOC and home equity loans; for the fees and insurance premiums, see HECM fees and mortgage insurance.
How to verify this yourself
Read the CFPB pages and the two HUD regulation sections in the reference list; they are the source for every statement above. The loan documents and the counseling certificate you receive are your own record of your terms. To check the person you are working with, use our guide to verifying a loan officer’s NMLS license. Our published standard covers how we check loan originators, and the Register shows that method; neither reviews a lender’s or servicer’s handling of your loan.
What this page does not cover
This page is general information, not legal advice. It does not say whether a HECM suits anyone, and it covers neither proprietary (privately insured) reverse mortgages nor the HECM’s costs, which have their own page. The CFPB pages were last reviewed 28 August 2026 (what a reverse mortgage is, and who can get one) and 11 September 2024 (repayment). This page was last reviewed 6 October 2026.
Your next step
If you or a relative is looking at a reverse mortgage, ask for the loan terms in writing and for the name of a HUD-approved counseling agency, and compare the repayment triggers in the documents with those described on this page. Then return to the Mortgage help library for related guides.