Understanding Reverse Mortgages

A reverse mortgage is a loan option designed for homeowners age 62 and older (and in some cases, 55+ depending on the program). It allows you to access a portion of your home’s equity without taking on a monthly mortgage payment.

Instead of making payments to a lender, the loan works in reverse—you receive funds based on the value of your home. These funds can be taken as a lump sum, monthly income, a line of credit, or a combination that fits your needs.

One of the most important things to understand is this: you remain the owner of your home. You can continue living there as long as it remains your primary residence and you keep up with property taxes, homeowner’s insurance, and basic maintenance.

For many homeowners, a reverse mortgage becomes a strategic financial tool—helping supplement retirement income, cover unexpected expenses, or simply create more breathing room in their monthly budget.

What is a HECM?

A Home Equity Conversion Mortgage (HECM) is the most common type of reverse mortgage. It is insured by the Federal Housing Administration (FHA), which adds a layer of protection for borrowers.

With a HECM, you have flexibility in how you receive your funds. You can choose:

  • A lump sum

  • Monthly payments

  • A line of credit that can grow over time

  • Any combination of these options

Another key feature is the built-in consumer protections. Before moving forward, borrowers are required to complete independent counseling through a HUD-approved agency. This ensures you fully understand how the loan works and how it fits into your financial picture.

If your home falls within FHA lending limits and you value the security of a government-insured program, a HECM is often a strong option.

What is a Jumbo Reverse Mortgage and How is it Different from a HECM?

A Jumbo Reverse Mortgage is designed for homeowners with higher-value properties that exceed FHA loan limits.

Unlike a HECM, Jumbo reverse mortgages are proprietary loans offered by private lenders and are not government-insured. Because of this, they come with different features and benefits.

Here’s how they typically compare:

  • Higher Loan Amounts – Access more of your hoome's equity if your property value is above FHA limits.

  • No Mortgage Insurance Premiums – Since these are privately funded loans

  • Expanded Age Flexibility – Some programs allow borrowers as young as 55

  • Simplified Payout Structure – Jumbos often offer lump-sum payouts, rather than multiple disbursement options.

For homeowners with high-value homes, like in the San Francisco Bay Area, a Jumbo reverse mortgage could provide access to significantly more funds than a traditional HECM.

Using a Reverse Mortgage to Buy Your Next Home (HECM for Purchase)

A reverse mortgage isn’t just for tapping into equity—it can also be used to purchase a new home.

This option is called a HECM for Purchase, and it allows you to buy a home using a combination of your available funds (like proceeds from a home sale or savings) and a reverse mortgage—without taking on a monthly mortgage payment.

Here’s how it works:

  • You make a down payment (typically 45–65% depending on age and rates)

  • The reverse mortgage covers the remaining balance

  • No required monthly mortgage payments

  • You must live in the home as your primary residence and remain compliant with loan terms

Why homeowners consider this strategy:

  • Downsize or right-size into a more manageable home

  • Move closer to family or into a preferred location

  • Purchase a home that better fits aging-in-place needs

  • Preserve cash flow in retirement by eliminating monthly mortgage payments

This can be a powerful option if you're planning a move and want to maintain financial flexibility while still owning your home.

Who Qualifies for a Reverse Mortgage?

Qualifying is often more straightforward than people expect. In general, you’ll need to:

  • Be at least 62 years old (some programs allow for 55+ ask me!)

  • Own your home or have significant equity

  • Live in the home as your primary residence

  • Stay current on property taxes, homeowners insurance, and basic upkeep

Unlike traditional loans, there are no strict income or credit score requirements. However, lenders will review your financial situation to ensure you can meet the ongoing responsibilities of homeownership.

If you’re married, there are also protections in place for your spouse—even if they are younger—so they can continue living in the home.

Built-In Protections for Seniors With a Reverse Mortgage

Reverse mortgages are highly regulated and include important safeguards to protect borrowers:

  • Independent Counseling Required
    You’ll meet with a HUD-approved counselor to review the loan and ask questions before moving forward

  • Non-Recourse Protection
    You or your heirs will never owe more than the home is worth

  • You Remain the Owner
    As long as you meet loan obligations, the home stays in your name

  • Spousal Protections
    Eligible spouses can continue living in the home after the borrower passes away

  • Government Oversight (for HECMs)
    FHA insurance and guidelines help ensure transparency and borrower protection

These safeguards are in place to provide peace of mind and help you make confident, informed decisions about your financial future.

Reverse mortgages are designed to give you additional financial resources—not take resources away. With the right guidance, this loan can be a powerful tool for a secure and comfortable retirement.

I'd be happy to speak with you and/or your loved one to see if a reverse mortgage might be a good option for you.

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Richard Wood

Ph: 650-750-5032

NMLS#1435894

Reverse Mortgage Branch Manager

1234 Cortez Ave, Burlingame, CA 94010

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Reverse mortgage advisor serving Burlingame, the Bay Area Peninsula and San Mateo County.

Licensed by the California Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act.

NMLS # 1435894 | Licensed through Traditional Mortgage Acceptance Corporation dba GoodLife Home Loans | NMLS ID: 971307 | 777 108th Avenue NE, Suite 1670, Bellevue, WA 98004

Equal Housing Lender | © 2026 Richard Wood, Reverse Mortgage Specialist and Branch Manager. All Rights Reserved.

Reverse Mortgage Disclaimer: A reverse mortgage is a loan that must be repaid when the last borrower no longer resides in the home, the property is sold, or the borrower fails to meet loan obligations such as paying property taxes and homeowners insurance or maintaining the property. Failure to meet these obligations may result in foreclosure. Not all borrowers will qualify. Terms and conditions apply. Consult with a tax advisor for potential tax implications and with a financial advisor for any impact on government benefits.

This website has not been reviewed, approved, or issued by HUD, FHA, or any government agency. The products or services offered herein have not been sponsored or endorsed by any government agency.

This is not a commitment to lend. Terms and conditions are subject to change without notice.

For additional information visit NMLS Consumer Access