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What Happens to a Reverse Mortgage When You Die

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When does the loan come due?

A reverse mortgage (HECM) becomes due and payable when the last surviving borrower dies, sells the home, or lives somewhere else for 12 months. It does not come due just because one of two borrowers dies, as long as the survivor is also a borrower on the loan.

What can the heirs do?

Heirs generally have 6 months to decide, and that period can often be extended. During that time they can:

• Repay the loan balance and keep the home.
• Sell the home themselves and keep any money left after the loan is paid off.
• Buy the home for 95% of its appraised value if the balance owed is higher than the home's worth.
• Simply deed the home back to the lender if they don't want it.

Source: CFPB — Reverse mortgage: after the borrower.

Will heirs ever owe more than the house is worth?

No. HECMs are non-recourse loans. Neither the borrower nor the estate nor the heirs ever have to pay more than the home's value when it is sold — or 95% of the appraised value if the heirs choose to buy it. Nobody's other assets or savings are at risk because of this loan.

What if a spouse who isn't on the loan is still living there?

An eligible non-borrowing spouse may be able to stay in the home under current HUD rules, if certain requirements are met. The rules are specific and can change. Ask the HUD counselor directly, by name, whether the surviving spouse qualifies — do not assume either way.

Proprietary ("jumbo") reverse mortgages are different

Some higher-value homes use a proprietary reverse mortgage instead of the FHA-insured HECM. These are not FHA-insured, and the protections described above — including the 95%-of-value option and the non-recourse limit — may not work the same way. Ask the counselor which type of loan is involved before assuming any of this applies.

Free help before you decide anything

Free or low-cost counseling from a HUD-approved agency is required before a reverse mortgage is taken out, and the same office is a place to bring questions about an existing loan and what heirs should do. Call 1-800-569-4287. See HUD — HECM counseling and HUD — Home Equity Conversion Mortgages for seniors.

Watch for warning signs if anyone contacts the family after a death: pressure to sign quickly, any up-front fee demanded by a third party, or anyone discouraging a call to the HUD counselor. See FTC — Reverse mortgages.

What to do next

This page is general information only — it is not legal, financial or tax advice, and it can be wrong. Terms change, and the HUD counselor and the lender's own paperwork control what actually happens in your case. Before signing or deciding anything, confirm the details with the HUD counselor and, if needed, an elder-law attorney.

The free tool that goes with this guide reads your own numbers — the loan balance, the home's estimated value, and the timeline you're facing — and explains in plain words which of these options apply to your situation. No account. Nothing is stored.

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.