How to Qualify for a Reverse Mortgage
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.
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.
Recent Reverse Mortgage Articles