Reverse mortgage loans are a popular option for senior citizens to tap the home equity equity in their homes. While there are a number of mortgage lender offering various reverse mortgage programs with different eligibility and qualification guidelines, the Home Equity Conversion Mortgage (HECM) is the only one insured by the U.S. Federal Government. Any approved FHA lender has the ability to originate a HECM loan to help the seniors secure the financing they need.
To be eligible for a FHA HECM, the homeowner must be at least 62 years old with a significant amount of equity in their primary residence. The approval of a reverse mortgage insured by FHA depends on the satisfaction of a number of conditions. Upon a successful completion of the loan approval process, a senior homeowner will be able to withdraw the home equity in their home. The loan will also provide flexibility regarding how and when the payments are made. It’s possible to choose a fixed payment or a line of credit or any other combination of them.
A new primary residence may also be purchased with the proceeds from a FHA reverse loan as long as the borrower has sufficient cash to cover the difference between the sales price plus closing costs and the HECM proceeds.
Reverse Mortgage Borrower Eligibility Requirements
In order to qualify, the borrower must:
- Be at least 62 years of age or older
- Either own the property outright or have substantial home equity
- Be currently living in the property
- Not have any delinquent federal debt
- Have attended a counseling session with a HUD-approved HECM loan counselor
In addition to above borrower requirements, the property to be used as collateral for a reverse mortgage must meet the following HECM property guidelines:
- Only residential properties with no more than four units, with at least one unit occupied by the borrower
- If the property is a condo unit, it should be located in a HUD-approved condo project
- If it’s a manufactured home, it should meet all FHA requirements
The FHA lender may choose to do a thorough verification regarding your income sources, assets, current debt obligations, payments and credit history. It’s also necessary that you are current on your payments related to property taxes. An active property insurance policy that covers any hazards is also required.
Still have questions about FHA reverse mortgage requirements, be sure to speak with an FHA reverse mortgage specialist who can assist you. Speaking with a specialist is free and they can help you decide what is best for your situation.Click to See the Latest Mortgage Rates»