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How Much Does a Reverse Mortgage Really Cost

Use the free tool — Reverse Mortgage Check

What a reverse mortgage actually is

A Home Equity Conversion Mortgage (HECM) is the FHA-insured reverse mortgage most people mean when they say "reverse mortgage." To qualify, the borrower must be 62 or older, the home must be the primary residence, and it must be owned outright or the existing mortgage paid off with the HECM proceeds. The borrower still has to pay property taxes, homeowners insurance (and flood insurance if required), and keep up the home. Falling behind on any of that counts as default and can lead to foreclosure. See HUD — Home Equity Conversion Mortgages for seniors.

Free HUD counseling from an approved agency is required by law before you can apply. Call 1-800-569-4287. See HUD — HECM counseling.

There are also "proprietary" or "jumbo" reverse mortgages for higher-value homes. They are not FHA-insured, and the protections are different. Ask your counselor specifically about that if it comes up.

What it costs — up front and over time

This tool never tells you a dollar amount you "can get." The amount depends on the youngest borrower's age, the home's appraised value up to the FHA limit, and current interest rates. What is known is how the costs work:

• An up-front FHA mortgage insurance premium of 2% of the home's value.
• An annual mortgage insurance premium (MIP) of 0.5% of the loan balance.
• An origination fee (capped), plus closing costs and ongoing servicing fees.
• Interest and MIP accrue over time, so the loan balance grows and the home equity shrinks.

Ask your free HUD counselor for the numbers that apply to your situation, and check the lender's required TALC (total annual loan cost) disclosure before signing anything. See CFPB — Reverse mortgages.

What happens when you move or die

The loan comes due when the last borrower dies, sells the home, or lives elsewhere for 12 months. At that point, heirs generally have 6 months (extendable) to repay the balance, sell the home, or buy it at 95% of its appraised value.

A HECM is non-recourse: the borrower or the estate never owes more than the home's value when it is sold. An eligible non-borrowing spouse may be able to stay in the home under current HUD rules if requirements are met — ask the counselor specifically about this before signing anything. See CFPB — Reverse mortgage: after the borrower.

Sales pitches that are red flags

Regulators warn about certain tactics. Be cautious if you hear or see any of these:

• Pressure to put the proceeds into an annuity, insurance product, or investment.
• A contractor or salesperson who suggests a reverse mortgage to pay for their own work.
• "You'll never lose your home" said without mentioning that you still must pay taxes and insurance.
• Advice to leave a younger spouse off the title to get more money.
• Any request for an up-front fee to a third party.
• Anyone who discourages you from doing the required HUD counseling session.

See FTC — Reverse mortgages.

Alternatives worth checking first

A reverse mortgage is one option among several. Before deciding, it may be worth checking:

• Florida's property-tax deferral for eligible seniors, and additional senior homestead exemptions — see Fla. Stat. 197.252.
• My Safe Florida Home and other home-repair grant programs, if the need is a specific repair.
• A home-equity loan or line of credit, if your income supports the monthly payments.
• Selling and downsizing.
• Checking eligibility for Medicaid, Extra Help, and other benefits.
• Family arrangements — only with an elder-law attorney involved.

What to do next

This is general information, not financial, legal, or tax advice, and it can be wrong. The free tool that goes with this page reads the numbers you type in — your age, whether a spouse is on the title, roughly what the home is worth, what's still owed, and what the money is for — and gives you the honest picture: how a HECM would work for that situation, what it would cost, what your heirs would face, and which alternatives to check first. Nothing you type is stored.

Whatever the tool tells you, complete the free HUD counseling (1-800-569-4287) before you apply, and confirm any numbers with your counselor and the lender's required disclosures. Talk to an elder-law attorney before signing anything.

Reverse Mortgage Check explains HECM rules, costs and alternatives in plain language from HUD, CFPB and FTC sources; it can be wrong, and it is not financial, legal or tax advice. Terms change — the HUD counselor and the lender's disclosures control. Nothing you type is stored.