• How to Qualify for a Reverse Mortgage

  • Reverse Mortgage Advice & Articles

    Qualifying for a reverse mortgage is easy. Because you don't have to make payments, your credit score and income are not considered. Most reverse mortgages are backed by the federal government and underwritten under FHA’s guidelines. They are called Home Equity Conversion Mortgages, or HECM (pronounced heck’um). Here are the factors that determine eligibility for these programs:

    • Age – the youngest borrower must be at least 62 years old.

    • Ownership – All persons on the home’s title must be obligated by the reverse mortgage.

    • Equity – You must own your home free and clear, or you must pay off your mortgage with the reverse loan proceeds.

    • Credit – There is no minimum credit score. However, to be eligible for the FHA-backed reverse mortgage, you cannot be listed on CAIVRS, a list of people who have defaulted on government debt. If you in an active (filed but not yet discharged) bankruptcy, the loan can’t be granted without the trustee’s approval. Reverse mortgages are the only home loan products that don’t involve higher interest rates and fees for people with bad credit.

    • Residency – The home must be your primary residence, and you must continue to live in it.

    • Collateral – The property must be in acceptable repair.

    Single purpose (also called special purpose) reverse mortgages have additional qualifications. The single purpose reverse mortgage is, as its name suggests, created to address a single need. Unlike most reverse mortgages, which allow the borrower to take the funds for any purpose, single purpose reverse mortgages are used only to meet a specific need, such as payment of property taxes. They are offered by government entities and charitable institutions, at low- to no-interest, and are reserved for seniors with very low incomes.

    Jumbo or proprietary reverse mortgages are offered by private lenders. They have been designed to meet the needs of those whose requirements can’t be met by the HECM (people listed on CAIVRS, for example, or people with expensive homes who want to borrow more than they can with the HECM). Jumbo reverse mortgages do not have to meet many of the guidelines established by HUD – the lenders make up their own guidelines.