An FHA reverse mortgage is designed for borrowers age 62 and older. It is also known as a Home Equity Conversion Mortgage.

FHA Loan Rates

November 1, 2014
FHA Rates for November 1, 2014
30 Year Fixed
3.25% Rate
3.29% APR
15 Year Fixed
2.75% Rate
3.0% APR
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FHA Reverse Mortgage

Convert Your Equity into Income

Established in 1934, The Federal Housing Administration (FHA) offers mortgage insurance on loans through FHA-approved lenders. The FHA provides this coverage for single and multi-family homes, and other approved purchases. The FHA does not issue loans, but FHA mortgage insurance is quite attractive for a prospective lender.

The main reason for this is simple; FHA mortgage insurance protects the lender's investment should a homeowner default on the mortgage. Loans insured by the FHA feature low down payments, and costs for FHA mortgage insurance are built into the mortgage payment. Those costs disappear five years into the loan or when the loan reaches 78% of the property value (whichever is longer).

An FHA reverse mortgage is designed for homeowners age 62 and older. It allows the borrower to convert equity in the home into income or a line of credit. The FHA reverse mortgage loan is also known as a Home Equity Conversion Mortgage (HECM), and is paid back when the homeowner no longer occupies the property.

There are requirements for an FHA-insured reverse mortgage or HECM;

  • The loan is based on the age of the youngest borrower if there are co-signers.
  • Homeowners are required to get consumer counseling and education before a HECM loan is approved.
  • Borrowers must own and live on the property as the primary residence.

Unlike other FHA loans, there are no income or credit qualifications for this type of loan. You will be required to have a current appraisal on the property as the amount of an FHA reverse mortgage is based on the home's value or the FHA insurance limit, whichever is lower. The FHA reverse mortgage;

  • Is a loan based on current interest rates.
  • Allows closing costs to be financed in the reverse mortgage.
  • Is for single-family homes or up to a four-unit home, but must be occupied by the borrower.
  • Is also permitted for FHA-approved condominiums and manufactured homes.

FHA reverse mortgages or HECM loans require the home to conform to FHA property standards and flood requirements. The FHA reverse mortgage has a variety ways the borrower can receive the money including monthly payments, a line of credit, or combinations of payments and credit. The borrower does not pay on these loans until the house is sold. The loan is repaid from the proceeds of the property sale including interest. Any remaining equity in the home after the loan has been repaid belongs to the homeowner.

If there is not enough money from the sale of the home to repay the loan in full, FHA insurance is used to pay the difference. If you need further clarification of the details of an FHA reverse mortgage, ask your loan officer to explain before you sign.

FHA Loan Articles

Read About Mortgage News, FHA Updates, and Guidelines
Program Changes for FHA Home Equity Conversion Mortgages

Home Equity Conversion Mortgages are for eligible borrowers age 62 or older, and feature no monthly mortgage payment for the borrower. Changes were announced effective June 2014.

FHA Refinance Loan Basics

Are you thinking about refinancing your home loan with an FHA loan? There are several options available, and depending on the circumstances you may qualify for an FHA Streamline Refinance or an FHA Cash-Out refinance loan.

FHA Streamline Loan Seasoning Periods

There is a required wait time between the date when the borrower begins making mortgage loan payments on the home and the day the borrower becomes eligible to apply for FHA Streamline Refinancing on that mortgage.

How Long are the Terms for FHA Mortgages?

If you're applying for a first-time FHA home loan, you're likely wondering how long your mortgage will be and what kinds of options you might have for shorter or longer loans, early payoff or what happens if you just pay the monthly mortgage minimum.

Lower Interest and Mortgage Payments: Streamline Refinance

In the last part of 2012 and the early parts of 2013, mortgage loan interest rates have been reported at lows not seen in many years, causing many FHA borrowers to think about refinancing an existing FHA home loan.

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