What Is a Reverse Mortgage?

Short answer

A reverse mortgage is a loan for homeowners 62 or older that turns home equity into cash with no monthly mortgage payment; interest and fees are added to the balance, and the loan is repaid when the last borrower sells, moves out or dies. The most common type is the FHA-insured Home Equity Conversion Mortgage (HECM), which in 2026 can use a home value of up to $1,249,125 (as of November 2026).

Definition

A loan against your home's equity where you keep title and make no monthly principal and interest payments. The balance grows over time and is paid back, usually from the sale of the home, when you no longer live there.

Worked example

Example only, not a quote: a 70-year-old owner in Kendall has a $500,000 home with a $60,000 mortgage left. A HECM pays off the $60,000 at closing, so the monthly mortgage payment ends, and the remaining available funds can be taken as a line of credit or monthly payments. HUD's upfront mortgage insurance is 2% of the home value, here $10,000, plus 0.5% a year on the balance. The origination fee cap for this home works out to $5,000 (2% of the first $200,000 plus 1% of the next $300,000), under HUD's $6,000 maximum. She must still pay property taxes, insurance and any HOA dues. Final amounts depend on age, rates and appraisal, subject to approval.

HECM basics from HUD

As of November 2026, HUD's rules include:

• Age and home: at least one borrower 62 or older, living in the home as a principal residence, with the home owned outright or a large share paid down.
• Counseling first: every borrower meets with a HUD-approved HECM counselor before applying.
• Property types: single-family, 2-4 units with one unit owner-occupied, HUD-approved condos, FHA single-unit approved condos and FHA-compliant manufactured homes.
• Costs: 2% upfront mortgage insurance, 0.5% a year on the balance, and an origination fee capped at $6,000.
• How you get paid: adjustable-rate HECMs offer monthly payments for life (tenure), for a set term, a line of credit, or a mix; fixed-rate HECMs pay a single lump sum.
• No federal debt delinquency, and enough income or assets to keep up with taxes, insurance and HOA.

What happens to the home later

Per the CFPB, when the loan comes due, heirs can pay it off and keep the home, or sell it and keep any equity left. If the balance is more than the home is worth, they can settle by selling for at least 95% of the appraised value, and FHA insurance covers the rest. Heirs usually have 30 days after the due-and-payable notice, which may be extended up to 6 months to sell or refinance. Rates vary daily; call 305-425-1990 for today's pricing.

In South Florida

In South Florida the big risk is not the loan, it's the carrying costs: you must keep paying property taxes, windstorm and flood insurance and HOA dues, and falling behind can make the loan due. Because title stays in your name, you keep owning the home and can keep a homestead exemption you qualify for. Many Miami seniors live in condos, and a condo only works if the building is FHA-approved or the unit meets FHA single-unit approval. See reverse mortgages in Florida and reverse mortgages in Miami.