A reverse mortgage (Home Equity Conversion Mortgage, or HECM) can be called due if you do not pay property taxes or insurance, or if you are away from the home for more than 12 consecutive months because of illness and no other borrower lives there (24 CFR 206.27(c)(2), eCFR, checked October 14, 2026).
The entry rules, in plain words
Most reverse mortgages are federally insured Home Equity Conversion Mortgages (HECMs), and HUD's rules set the floor for every lender.
- Age: the youngest borrower must be 62 or older at closing (24 CFR 206.33, eCFR, checked October 14, 2026).
- Your main home: the property must be the principal residence of each borrower, and of an eligible non-borrowing spouse, at closing (24 CFR 206.39, same source).
- Enough equity: you must own the home outright or have a mortgage small enough to pay off at closing, with your own money or the loan proceeds (CFPB, Can anyone take out a reverse mortgage loan?, last reviewed August 28, 2026).
- No delinquent federal debt, such as federal income tax or federal student loans, although the loan can be used to pay it off (same CFPB page).
- The house itself: a one-family home or a condominium unit, or other property types HUD allows (24 CFR 206.45); a condominium project must be acceptable to HUD (24 CFR 206.51); and the home must meet HUD property standards, with repairs made or set aside for (24 CFR 206.47, all checked October 14, 2026).
- Counseling with a HUD-approved HECM counselor, covered below.
The most you can borrow against is also capped: the 2026 HECM limit is $1,249,125 for the whole country, effective January 1, 2026 (HUD, FHA Mortgage Limits, HECM, checked October 14, 2026). See the reverse mortgage calculator for how the amount is figured.
The financial assessment and the set-aside (LESA)
There is no minimum income, but there is a check. Before approval, the lender must assess whether you can keep up with the loan terms and whether the loan is a sustainable solution, looking at your credit history, cash flow and residual income, extenuating circumstances and compensating factors (24 CFR 206.37, eCFR, checked October 14, 2026).
If the assessment shows a risk you will fall behind on property taxes and insurance, the lender may require a Life Expectancy Set-Aside (LESA): part of your borrowing amount is held back to pay those bills (24 CFR 206.205(b), same date). It is sized from the projected property charges over the youngest borrower's life expectancy, using a HUD formula (24 CFR 206.205(c)(2)). You can also choose one voluntarily.
A set-aside lowers the cash you can take, but it also lowers the risk of a tax or insurance default, the most common path to trouble described below.
Counseling: what it covers and how to find a counselor
Counseling is mandatory. The borrower, any non-borrowing spouse (eligible or not) and any non-borrowing owner must receive it, and the counselor gives a certificate the lender needs before closing (24 CFR 206.41, eCFR, checked October 14, 2026). The lender must hand you a list of approved counselors at first contact (same rule).
The session covers your eligibility, the financial implications of the loan and alternatives (CFPB, Can anyone take out a reverse mortgage loan?, last reviewed August 28, 2026). If a non-borrowing spouse is involved, the counselor must explain what that spouse needs to do to stay in the home after the borrower dies (same rule). The counselor must also ask whether you have signed with an outside "estate planning service" that charges a fee tied to getting the loan (same rule).
To find a counselor, use HUD's HECM counselor roster or call (800) 569-4287 (HUD, Reverse Mortgage for Seniors (HECM), checked October 14, 2026). Agencies may charge a reasonable fee but cannot charge you if you cannot afford it, and must explain charges before counseling (CFPB, How much does a reverse mortgage loan cost?, last reviewed May 28, 2024). Pick the counselor yourself rather than one a salesperson books for you.
The rules you must keep meeting, or the loan comes due
After closing there are no monthly loan payments, but you still have obligations. The loan can be called due and payable, with HUD's approval, if (24 CFR 206.27(c)(2), eCFR, checked October 14, 2026):
- the home stops being the principal residence of any borrower;
- a borrower is away for more than 12 consecutive months because of physical or mental illness and no other borrower lives there;
- property charges are not paid: property taxes, hazard and flood insurance, and also ground rent, condo and homeowners association fees (24 CFR 206.205(a));
- another obligation in the mortgage is not met, such as keeping the property in good repair (24 CFR 206.27(b)(5)).
It is also due when the last borrower dies (subject to the eligible non-borrowing spouse deferral) or sells. Borrowers must certify each year that the home is still their principal residence; a missed certification can itself trigger a default notice (CFPB, notice of default or foreclosure, last reviewed September 11, 2024). For what happens at death, see what happens to a reverse mortgage when the owner dies.
How a reverse mortgage foreclosure happens, and how to stop one
The usual path is quiet: a tax bill or insurance renewal goes unpaid, a default notice follows, and the loan is called due. The CFPB's advice is to act quickly: pay if you can, and if you cannot, contact a HUD-approved housing counseling agency or an attorney right away (CFPB, same notice page). Your Area Agency on Aging may know of local tax or repair help: find it through the Eldercare Locator or 1-800-677-1116 (CFPB, cannot pay taxes or insurance, last reviewed July 11, 2022).
The rules give a borrower room to cure. Even after foreclosure has started, the lender must let a borrower fix the problem and reinstate the loan, with costs added to the balance, though it may refuse if it already allowed a reinstatement in the prior two years (24 CFR 206.125(a)(3), eCFR, checked October 14, 2026). The loan is non-recourse: the lender can collect only through the house, with no deficiency judgment against you (24 CFR 206.27(b)(8)).
When a reverse mortgage can make sense
It can fit someone 62 or older who plans to stay in the home for many years, has the cash flow to pay taxes, insurance and upkeep, wants no monthly loan payment, and is comfortable leaving less equity to heirs. A line of credit opened earlier and used later is one use the CFPB describes (CFPB, payment options, last reviewed July 11, 2022). It fits poorly if you may move to care or to family within a few years, or if property charges already strain your budget. Compare it with a home equity line, downsizing or selling on our reverse mortgage vs HELOC page.
A plain example: does this couple qualify, and what is left?
Hypothetical: a married couple, youngest spouse 70, owns a home appraised at $500,000 with a $150,000 mortgage left. We use a hypothetical expected interest rate of 7.0%; the real figure depends on the index on the day you lock and the lender's margin (see reverse mortgage rates). Third-party closing costs of $4,000 are also hypothetical.
| Item | Amount |
|---|---|
| Maximum claim amount (appraised value, under the $1,249,125 limit) | $500,000 |
| Principal limit factor, age 70 at 7.0% (HUD PLF table, effective October 2, 2017) | 0.370 |
| Principal limit ($500,000 x 0.370) | $185,000 |
| Less upfront mortgage insurance, 2% of $500,000 | $10,000 |
| Less origination fee (2% of $200,000 + 1% of $300,000 = $7,000, capped at $6,000) | $6,000 |
| Less hypothetical third-party closing costs | $4,000 |
| Less payoff of the existing mortgage | $150,000 |
| Left for the couple | $15,000 |
Sources for the fixed figures: the PLF and the 2% upfront premium come from HUD Mortgagee Letter 2017-12 and its PLF tables (effective October 2, 2017); the origination cap is 24 CFR 206.31 (checked October 14, 2026). Arithmetic: $185,000 minus $10,000, $6,000, $4,000 and $150,000 equals $15,000.
They qualify on equity, but only just. If the mortgage were $190,000 instead, the costs and payoff would come to $210,000, and they would need to bring $25,000 to closing. A required set-aside for taxes and insurance would also come out of the $185,000 and could close the gap entirely. Ask for the set-aside amount in writing before you count on any cash.
Red flags
- Being told the financial assessment is "just a formality" before anyone has looked at your tax and insurance bills.
- A salesperson who picks your counselor for you or sits in on the counseling session.
- Pressure to sign with an outside "estate planning" service that charges a fee once the loan closes.
- Leaving a spouse under 62 off the loan without explaining what happens to that spouse when you die.
- Being told you can move in with family or into assisted living and "keep the loan" without a co-borrower living in the home.
- Discouraging a set-aside for taxes and insurance because it lowers the cash you get.
- A plan that uses nearly all the principal limit just to pay off an old mortgage, with no cushion for property taxes.
- Silence about the yearly occupancy certification and what happens if you miss it.
- Repairs "to be handled later" with no written repair set-aside.
- Describing the loan as one you "can never lose your home" on, without mentioning taxes, insurance and upkeep.
Questions to ask before you sign
- Will the financial assessment require a set-aside, and how much is it in dollars?
- After payoffs and costs, how much can I actually draw in the first 12 months?
- What property charges am I responsible for, including HOA or condo fees?
- How do I return the yearly occupancy certification, and to whom?
- If I go into a hospital or nursing home, when does the 12-month clock start?
- Is my spouse a co-borrower, an eligible non-borrowing spouse, or neither, and what happens to them after I die?
- What repairs does the appraisal require, and are they set aside in writing?
- Can I choose my own HUD-approved counselor, and is there a fee?
- What happens if I fall behind on taxes or insurance, and how long do I have to fix it?
- Have I compared this with a home equity line, a smaller home, or selling?
Long-Term Care and Your Home: Read This Before You Sign
A one-page checklist: what Medicare will and will not pay, the Medicaid look-back and estate recovery basics, the questions to ask before you buy long-term care coverage or take a reverse mortgage, and the tax rules if the house is sold. Reverse mortgage costs and the questions to ask, plus the obligations that can make the loan come due. We’ll email it to you.
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Sources
- eCFR: 24 CFR part 206, Home Equity Conversion Mortgage Insurance, sections 206.27, 206.33, 206.37, 206.39, 206.41, 206.125, 206.205 (checked October 14, 2026)
- CFPB: Can anyone take out a reverse mortgage loan? (last reviewed August 28, 2026)
- CFPB: Notice of default or foreclosure on a reverse mortgage (last reviewed September 11, 2024)
- CFPB: How much does a reverse mortgage loan cost? (last reviewed May 28, 2024)
- HUD: Reverse Mortgage for Seniors (HECM), counselor roster and phone (checked October 14, 2026)
- HUD: HECM counselor roster (checked October 14, 2026)
- HUD: FHA Mortgage Limits, HECM, calendar year 2026 (effective January 1, 2026)
- HUD: HECM Principal Limit Factor tables, effective October 2, 2017 (Mortgagee Letter 2017-12)
The Retirement Literacy Foundation is a 501(c)(3) public charity. This page is general education, not tax, legal or investment advice. Nothing is sold here, no product is recommended, and RLF accepts no funding from financial companies. Rules and figures change; each one above shows its source and date. Check anything you plan to act on with your state insurance department or a qualified professional who is not paid on the product.