HUD Reverse Mortgage Program
Homeowners 62 and older who have paid off their mortgages or have only small mortgage
balances remaining are eligible to participate in HUD's reverse mortgage program. The
program allows homeowners to borrow against the equity in their homes.
Homeowners can receive payments in a lump sum, on a monthly basis (for a fixed term or for
as long as they live in the home), or on an occasional basis as a line of credit.
Homeowners whose circumstances change can restructure their payment options.
Unlike ordinary home equity loans, a HUD reverse mortgage does not require repayment as
long as the borrower lives in the home. Mortage companies recover their principal, plus
interest, when the home is sold. The remaining value of the
home goes to the homeowner or to his or her survivors. If the sales proceeds are
insufficient to pay the amount owed, HUD will pay the company the amount of the shortfall.
The Federal Housing Administration, which is part of HUD, collects an
insurance premium from all borrowers to provide this coverage.
The size of reverse mortgage loans is determined by the borrower's age, the interest rate,
and the home's value. The older a borrower, the larger the percentage of the home's value
that can be borrowed.
For example, based on a loan at an interest rate of 9 percent, a 65-year-old could borrow
up to 26 percent of the home's value, a 75-year-old could borrow up to 39 percent of the
home's value, and an 85-year-old could borrow up to 56 percent of the home's value.
There are no asset or income limitations on borrowers receiving HUD's reverse mortgages.
There are also no limits on the value of homes qualifying for a HUD reverse mortgage.
However, the amount that may be borrowed is capped by the maximum FHA mortgage limit for
the area, which varies from $81,548 to $160,950, depending on local housing costs. As a
result, owners of higher-priced
homes can't borrow any more than owners of homes valued at the FHA limit.
HUD's reverse mortgage program collects funds from insurance premiums charged to
borrowers. Senior citizens are charged 2 percent of the home's value as an up-front
payment plus one-half percent on the loan balance each year. These amounts are usually
paid by the mortgage company and charged to the borrower's principal balance.
FHA's reverse mortgage insurance makes HUD's program less expensive to borrowers than the
smaller reverse mortgage programs run by private companies without FHA insurance.
State FHA Loan
Limits |
FHA Loans
FHA Mortgage Insurance
FHA Streamline Refinance
Down Payment Gifts
Bridal Registry Account
Bankruptcy and Foreclosure
Refunds Ready on FHA Loans
Single Family Home Program
Single Family Rehab Program
Title I Improvement Loan
Energy Efficient Mortgages
Reverse Mortgage Program |
