Have you been considering a reverse mortgage but are unsure if you qualify? Here's a breakdown of reverse mortage requirements to help you better understand what you need to qualify.
Reverse Mortgage Requirements
- Age Qualification - you must be 62 years or older
- Occupancy - you must live in the property as your principal residence
- Federal Debt - you must not be delinquent on any federal debt
- Consumer Information Session - you must participate in an information session given by a HUD-approved HECM counselor
- Primary Lien - A reverse mortgage must be the primary lien on the home. Any existing mortgage must be paid off using the proceeds from the reverse mortgage.
- Type of Home - the property must be a single family home or 2-4 unit home with one unit occupied by the borrower
- Condominium Requirements - If the property is a condominium, it must be a HUD-approved condominium project
- Manufactured Home Requirements - Manufactured homes must meets FHA requirements
- Property Condition - You are responsible for the repairs and maintenance of the property.
- Taxes - You must pay all relevant property taxes on the property
- Insurance - You must maintain home insurance as well as hazard and flood insurance
- Fees - You must continue to make fee payments related to the property, including HOA fees
- Personal finances - Your income, assets, expenses, and credit history will be verified
For adjustable interest rate mortgages, you can select one of the following payment plans:
- Lump Sum
- Monthly Payments (Tenure or Term)
- Line of Credit
- Modified Tenure or Term
Requirements for Unmarried Partners
The fact that you're not married to your partner will not prevent you from getting a reverse mortgage loan. Here are the basics you need to know about reverse mortgage requirements for unmarried couples that will protect your family from surprises down the road.
- First off, you don't have to be married to your significant other for him or her to qualify as a co-borrower on your reverse mortgage loan. The rules and tips detailed here apply to the most popular reverse mortgage -- the Home Equity Conversion Mortgage (HECM), which is Federal Housing Administration's reverse mortgage program and has the protections and oversight of the government.
- There are reverse mortgage loans out there which are not backed by the FHA. These reverse mortgages are called "proprietary loans" or "jumbo reverse loans" and are subject to whatever agreement you sign with the lender offering the loan. About 90 percent of reverse mortgages today are HECM loans.
- The only requirement you and your significant other need to meet for the FHA's reverse mortgage is that you both need to be at least 62 years old. If you're both 62 or older, you can be co-borrowers on the reverse mortgage loan.
- If your partner is not yet 62, you can still get a reverse mortgage, but there are provisions you need to be aware of that will affect this person upon your death or if you move away from the home.
Reverse Mortgage Gotchas
- If your significant other is over the age of 62, he or she has the same protections that you do as a co-borrower. If your partner is younger than 62 and you take out a reverse mortgage, your partner and other family residing in the home have no protection.
- What does this mean if you move out of the home or die? Co-borrowers are protected and can remain in the home if you move or pass away. Partners who are not co-borrowers and other family members living there may be forced to move out. This is true if you pass away or are forced to move to a nursing home or other living facility.
- Your partner or family members are given the option of buying out the loan with cash or even taking out a new mortgage loan to cover what's owed. If they're unable to pay off the loan or acquire new financing, they'll be forced to move.
- That fact that you and your partner are not married will not prevent you from taking advantage of your equity with a reverse mortgage loan. You will want to take steps to protect your family members by taking out a reverse mortgage backed by the FHA and ensuring your spouse is a co-borrower whenever possible.