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

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FHA.com is a privately owned website, is not a government agency, and does not make loans.

FHA Reverse Mortgage

Convert Your Equity into Income

FHA Reverse Mortgage - HECM

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.

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 Refinance Options for Homeowners

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FHA Loan Articles and Mortgage News

FHA Single-Close Construction Loans and Rehab Loan Issues

September 16, 2022 - If you seek an FHA One-Time Close construction loan or an FHA 203(k) Rehabilitation loan, there are some questions to ask when comparing lenders. You will need to know the lender’s policy on things like how the loan converts from the construction phase to the permanent phase.

Unpaid Federal Debts and Your FHA Loan Application

September 15, 2022 - Does it hurt a borrower’s chances when applying for an FHA mortgage loan if there’s a debt owed to the federal government? Can unpaid federal taxes become a barrier to an FHA mortgage loan? The FHA recognizes two types of circumstances–tax debt and non-tax debt.

Streamline FHA 203(k) Rehabilitation Loans

September 13, 2022 - The FHA offers something called a 203(k) Rehab loan for borrowers who want to purchase and rehab a property. This is a great loan offering, but what about borrowers who don’t need to do extensive rehab work to a home?

FHA Loan Applications and Debt Ratios

September 6, 2022 - When you apply for an FHA mortgage loan, your lender is required to make sure you can afford the loan and your current amount of monthly debt. The loan officer will be required to calculate the amount of your financial obligations and compare it to your current income to determine approval eligibility.

FHA Loans and Mortgage Insurance Requirements

August 23, 2022 - Conventional mortgages require private mortgage insurance (PMI) unless the borrower makes a  lender-prescribed down payment that eliminates the need.  FHA mortgage loans don’t require PMI, but they do require an Up Front Mortgage Insurance Premium and MIP instead.