The 60% rule for reverse mortgages (specifically HECMs) is an FHA-mandated restriction that limits the amount of cash a borrower can withdraw in the first 12 months to 60% of their total available principal limit. Introduced to promote financial sustainability and prevent rapid depletion of home equity, this rule limits upfront access unless more is needed to pay off existing, mandatory debts.
The 60% rule for reverse mortgages is a lending guideline that limits how much of your reverse mortgage proceeds you can access during the first year if you're taking out a Home Equity Conversion Mortgage (HECM) that HUD insures.
When a reverse mortgage borrower dies, heirs have several options. You can pay off the loan balance and keep the property. You can sell the property and keep any equity beyond the loan balance. Or you can walk away, allowing the lender to foreclose.
How long do my heirs have to pay off the reverse mortgage? In most cases, heirs have six months to satisfy the loan. They can request up to two 90-day extensions, giving them up to 12 months total. This timeline provides plenty of breathing room to handle probate, list the home, and close a sale or refinance.
In a reverse mortgage, you remain the legal owner of your home, keeping the title and deed in your name; the lender places a lien on the property as security for the loan, but never takes ownership, meaning you can live there as long as you pay taxes, insurance, and maintain the property. The loan is repaid when you sell, move out, or pass away, typically through the home's sale by you or your heirs.
The key requirements for a reverse mortgage include being of eligible age (62 or older, or 55 or older in some cases), having enough equity in the home and retaining full-time residence in the property.
The Federal Housing Administration (FHA) increased the maximum claim amount on the Home Equity Conversion Mortgage (HECM), the only type of reverse mortgage loan it insures, from $1,209,750 (2025) to $1,249,125 (2026). Not sure what all that means?
Even if you don't get as much money from a home equity loan as you would with a reverse mortgage, they're a much safer option. They set up immediate monthly payments and don't include the danger of rapidly increasing debt. That alone makes them a better choice for most people.
Reverse mortgage borrowers remain the owners of the home. Borrowers are still responsible for all applicable taxes, insurance, maintenance, and repair. Borrowers can never owe lenders more than the value of their home at the time the loan is repaid.
One out of every ten reverse mortgage is in default and could face foreclosure. Reverse mortgages are expensive. After ten years, interest and ongoing fees on a lump sum reverse mortgage can add up to more than $100,000, after twenty years interest can reach more than $300,000 on top of the original loan amount.
The HECM is the FHA's reverse mortgage program that enables you to withdraw a portion of your home's equity to use for home maintenance, repairs, or general living expenses. HECM borrowers may reside in their homes indefinitely as long as property taxes and homeowner's insurance are kept current.
A reverse mortgage can be an expensive way to borrow.
That's because reverse mortgage lenders factor your life expectancy into the equation. At age 65, with a life expectancy of 85, lenders anticipate your balance could grow for 20 years. Based on this, older borrowers can take advantage of more equity and a higher loan amount.
A reverse mortgage is a home loan that you do not have to pay back for as long as you live in your home. It can be paid to you in one lump sum, as a regular monthly income, or at the times and in the amounts you want. The loan and interest are repaid only when you sell your home, permanently move away, or die.
You must either own your home outright or have a low mortgage balance. Owning your home outright means you do not have a mortgage on it anymore. If you have a mortgage balance, you must be able to pay it off when you close on the reverse mortgage.
There are several kinds of reverse mortgage loans: (1) those insured by the Federal Housing Administration (FHA); (2) proprietary reverse mortgage loans that are not FHA-insured; and (3) single-purpose reverse mortgage loans offered by state and local governments.
If you decide to sell your home while you have a reverse mortgage loan, you will have to pay back the money you borrowed plus interest and fees.
When you take out a reverse mortgage loan, the title to your home remains with you. This webpage has information about HECMs, which are the most common type of reverse mortgage. Most reverse mortgages are Home Equity Conversion Mortgages (HECMs).
When the last borrower dies, a reverse mortgage becomes due, requiring heirs to either repay the full loan (plus interest/fees) by selling the home or paying cash, or turn the property over to the lender; heirs can keep the home by paying the lesser of the loan balance or 95% of the appraised value, but if they do nothing, the lender can foreclose. Heirs usually have about 30 days to decide and up to six months to act, with options like selling the home to pay off the debt or refinancing the loan.