Can I Get a Reverse Mortgage at Age 60?

A reverse mortgage allows homeowners to convert a portion of their home equity into cash. This loan provides funds without requiring monthly mortgage payments, provided the borrower adheres to the loan terms. It is a loan that must eventually be repaid, usually when the home is sold, the borrower moves out permanently, or passes away.

Eligibility Requirements

The minimum age for obtaining a reverse mortgage depends on the specific loan product. For a Home Equity Conversion Mortgage (HECM), the most common type and insured by the Federal Housing Administration (FHA), the primary borrower must be at least 62 years old. While age 60 does not meet the HECM requirement, some proprietary reverse mortgage products may allow borrowers as young as 55 or 60. If one borrower meets the age requirement, a younger spouse might be included as a non-borrowing spouse, but their age can influence the loan amount available.

Beyond age, significant home equity is a fundamental requirement; borrowers generally need at least 50% equity in their property. The property itself must be the borrower’s primary residence. Eligible property types include single-family homes, two-to-four unit properties (if one unit is owner-occupied), FHA-approved condominiums, and some manufactured homes. Lenders also conduct a financial assessment to ensure the borrower can meet ongoing property obligations, such as taxes and insurance.

Understanding How Reverse Mortgages Function

A reverse mortgage is a loan secured by home equity. No monthly mortgage payments are required. Instead, the lender disburses funds to the homeowner, and the loan balance grows over time as interest accrues on the outstanding balance.

Borrowers have several options for receiving funds, including a lump sum disbursement, fixed monthly payments for a set period (term payments), or for as long as they live in the home (tenure payments). A flexible line of credit, which grows over time on the unused portion, is another common option. The loan is considered “non-recourse,” meaning that neither the borrower nor their heirs will owe more than the home’s value at the time of sale or payoff.

The most common type is the Home Equity Conversion Mortgage (HECM), which is insured by the FHA. Proprietary reverse mortgages are private loans offered by lenders without government insurance. These proprietary products may offer different terms, such as lower age limits or higher loan amounts for properties exceeding HECM limits.

Costs and Financial Considerations

Reverse mortgages involve various costs, both upfront and ongoing, that affect the total amount owed and the remaining home equity. Upfront costs typically include an origination fee. For HECM loans, this fee is capped by law, generally at $2,500 for homes valued at $125,000 or less, and up to $6,000 for homes valued at $400,000 or more.

Another significant upfront cost for HECM loans is the Mortgage Insurance Premium (MIP), paid to the FHA. This initial MIP can be 0.5% of the property value if no more than 60% of the principal limit is drawn at closing, or 2.5% if more than 60% is drawn. Third-party closing costs, similar to traditional mortgages, also apply and can include appraisal fees, title insurance, recording fees, and credit checks. These upfront costs can often be financed into the loan.

Ongoing costs include interest rates, which accrue on the loan balance, increasing the amount owed over time. HECM loans also have an annual MIP of 0.5% of the outstanding mortgage balance. Some lenders may charge monthly servicing fees. These costs, along with accruing interest, reduce the home equity over the loan’s term.

Maintaining the Reverse Mortgage

Even without monthly mortgage payments, borrowers with a reverse mortgage have ongoing responsibilities to keep the loan in good standing. A primary obligation is the timely payment of property taxes. Failure to pay property taxes can lead to the loan becoming due and payable.

Borrowers must also maintain adequate homeowner’s insurance coverage on the property. This ensures the home remains protected against damage or loss, safeguarding the collateral for the loan. Additionally, borrowers are required to keep the home in good condition and perform necessary repairs and maintenance.

The home must remain the borrower’s primary residence. If the borrower moves out permanently, or is absent for more than 12 consecutive months for non-medical reasons, the loan can become due and payable. Non-compliance with these terms can result in the loan being called due.

The Application and Approval Process

The process of obtaining a reverse mortgage begins with mandatory counseling. This counseling, required for HECM loans, must be completed with an independent, HUD-approved housing counseling agency. The counseling session provides an understanding of how reverse mortgages work, their implications, and available alternatives. While counseling fees are generally paid by the borrower, some agencies may offer reduced fees based on financial hardship.

After completing counseling, borrowers can submit an application to a lender. The application process involves providing personal identification, proof of homeownership, and financial details. A home appraisal is then ordered to determine the property’s value, which helps establish the maximum loan amount. The appraisal also confirms the property meets HUD’s safety and structural standards.

Following the appraisal, the loan enters the underwriting phase. During this stage, the lender reviews the borrower’s financial capability, property condition, and ensures all requirements are met. Once approved, the final step is closing, where all loan documents are signed. After a mandatory three-day right of rescission period, funds are disbursed according to the chosen payment option.