What States Allow Reverse Mortgage at Age 55?

A reverse mortgage allows homeowners to convert a portion of their home equity into cash without requiring monthly mortgage payments. This loan is designed for older individuals who seek to access their home’s value while retaining ownership. Many homeowners are interested in whether this option is available to them at age 55.

Understanding Reverse Mortgage Age Requirements

The most widely recognized reverse mortgage product is the Home Equity Conversion Mortgage (HECM), which is insured by the Federal Housing Administration (FHA). For a HECM loan, at least one borrower must be 62 years of age or older. This federal standard sets the baseline for the majority of reverse mortgage offerings across the United States.

If one spouse is 62 or older and the other is younger, the younger spouse can sometimes be listed as a non-borrowing spouse on a HECM to ensure their right to reside in the home. This arrangement provides certain protections for the younger spouse, allowing them to remain in the home after the borrowing spouse’s death or departure, provided they meet other loan obligations.

Reverse Mortgages for Homeowners Age 55

While HECM loans require borrowers to be at least 62, some private financial products, often called “proprietary” or “jumbo” reverse mortgages, are available to homeowners as young as 55. These proprietary loans are not federally insured, meaning they are offered and backed by private lenders rather than the government.

The availability and specific terms of these age-55 reverse mortgage products can vary significantly by lender and by state. For example, some lenders may offer proprietary reverse mortgages to individuals aged 55 in certain states, while requiring a minimum age of 60 or 62 in others. Homeowners in states with higher property values or those seeking to access a greater portion of their equity might find these private options more suitable.

Proprietary reverse mortgages often allow for higher loan amounts than HECM loans, which have federal lending limits. Jumbo products can offer access to significantly more equity, making them an option for high-value properties. Unlike HECMs, proprietary loans typically do not require mortgage insurance premiums, though they may come with different interest rates and lender fees.

Key Eligibility Factors for All Reverse Mortgages

All reverse mortgages, whether HECM or proprietary, share common eligibility requirements related to the home and the homeowner’s financial situation. A significant amount of home equity is generally necessary, with a common guideline suggesting at least 50% equity in the property. The primary requirement is that the loan proceeds must be sufficient to pay off any existing mortgage on the home and cover the closing costs of the reverse mortgage.

The property itself must be the borrower’s primary residence. Eligible property types typically include:
Single-family homes
Multi-unit properties (up to four units, provided the owner occupies one)
FHA-approved condominiums
Certain manufactured homes that meet specific standards

Vacation homes, secondary residences, and income-producing properties are generally not eligible for a reverse mortgage.

A mandatory counseling session with a HUD-approved counselor is required for HECM loans and is often a strong recommendation for proprietary products. This session provides impartial education on how reverse mortgages work, their costs, alternatives, and the borrower’s responsibilities, ensuring the borrower fully understands the loan’s implications.

A financial assessment is conducted to determine the borrower’s capacity to meet ongoing property obligations, such as property taxes and homeowner’s insurance. This assessment reviews income sources, debts, and credit history to confirm the homeowner can maintain the property. If the assessment indicates a potential inability to cover these costs, a portion of the loan proceeds may be set aside in a Life Expectancy Set-Aside (LESA) account to cover future property charges.

Steps to Find a Reverse Mortgage Lender

When seeking a reverse mortgage, particularly for homeowners aged 55, researching and comparing multiple lenders is a beneficial first step. Look for lenders with demonstrated experience and specialization in reverse mortgage products, as their expertise can be valuable in navigating the process. It is advisable to explore both traditional banks that may offer these loans and specialized non-bank lenders who often prioritize reverse mortgage offerings.

Contacting several lenders allows for a comparison of loan terms, interest rates, and all associated fees, including origination, servicing, and closing costs. During these discussions, inquire specifically about proprietary reverse mortgage products for the age 55 demographic and their availability in your state. Understanding the various payment options and any potential restrictions on the funds is also important.

Verify the credentials of the lender and the loan originator, ensuring they are reputable and properly licensed. Checking customer reviews on independent platforms, such as the Better Business Bureau, can offer insights into a lender’s service quality and customer satisfaction. A qualified loan originator can guide you through the application process and help determine the most suitable product for your financial situation.