HECM (FHA-insured)
Home Equity Conversion Mortgage for eligible homeowners (generally age 62+). Principal limits follow HECM rules and counseling is mandatory. Payout choices include line of credit, tenure, term, or lump sum (within caps).
Home / Reverse Mortgage
Home equity for seniorsReverse mortgages: HECM and proprietary options explained carefully
A reverse mortgage lets eligible older homeowners convert part of their home equity into cash—via a line of credit, monthly payments, or a lump sum—without a required monthly principal-and-interest mortgage payment. It is a loan that accrues interest, requires taxes and insurance to stay current, and becomes due when the home is sold or the last borrower leaves. HECM (FHA) and proprietary/jumbo reverse products are the two main families.
NMLS #1660690 · Reviewed by UMortgage+
At a glance
HECM
Proprietary
Key facts
Educational ranges only. Confirm availability and overlays with a loan officer against current NEXA Lending guidelines (and partners where noted).
| HECM age (typical) | Youngest borrower generally 62+; HUD counseling required. |
|---|---|
| Proprietary | Private products; some allow younger minimum ages (e.g., 55+) and higher loan amounts—confirm menus. |
| Ownership | You keep the title; lender places a lien. |
| Ongoing obligations | Property taxes, homeowners insurance, HOA (if any), and maintenance. |
| Repayment | Due when the last borrower dies, sells, or permanently moves out (and other default events). |
| HECM for Purchase | Available for eligible buyers under HECM rules. |
Important reverse-mortgage disclosures (read this): A reverse mortgage is a loan that must be repaid when the last borrower sells, moves out permanently, or dies (and in other default events). It is not free money and not a government gift. Borrowers remain responsible for property taxes, homeowners insurance, and home maintenance. HECM borrowers must complete HUD-approved counseling before closing. This page is educational—not an offer.
Proprietary / jumbo reverse
Private reverse products for higher-value homes or, on some products, younger minimum ages (sometimes 55+). Not FHA-insured. Terms, fees, and counseling rules differ—compare carefully.
Fit
Who it's best for
- Homeowners 62+ seeking HECM flexibility
- Owners of higher-value homes comparing proprietary reverse products
- Seniors exploring HECM for Purchase
Maybe not
Who should look elsewhere
- Anyone needing a traditional forward purchase/refinance
- Borrowers who cannot keep taxes/insurance current
- People seeking “free money” or guaranteed inheritance outcomes
Trade-offs
Pros and cons
Pros
- Access equity without monthly P&I mortgage payment (taxes/insurance still due)
- Multiple payout structures
- HECM non-recourse protections
- May help age-in-place plans
Cons
- Interest and fees accrue; balance grows over time
- Upfront costs can be significant
- Reduces home equity for heirs
- Complex—counseling is essential
Working with a loan officer
How it works in 4 steps
Goals & fit
Map property, documentation path, and timeline to the right product family.
Compare terms
Review structure, fees, draws or payouts, and qualifications before you commit.
Underwrite / counsel
Clear conditions—or complete required counseling—and builder reviews when needed.
Close & fund
Sign, fund, and manage any construction draws through completion.
Illustrative only
Illustrative HECM thinking (not a quote)
Suppose a home is worth $500,000, the youngest borrower is in their 70s, and a HECM principal-limit factor might allow a substantial portion of value as a line of credit after set-asides for repairs or levies (factors change with rates and age).
If an illustrative principal limit were $250,000 and existing mortgages/fees totaling $80,000 must be paid off at closing, usable proceeds might be about $170,000 before ongoing growth of unused line-of-credit funds (HECM LOC growth features are program-specific).
Only a counselor + Loan Estimate/Total Annual Loan Cost disclosures can size your case.
Not a rate quote, APR, loan offer, or commitment to lend. Ask a loan officer for scenario-specific disclosures.
Straight answers
Frequently asked questions
Who qualifies for a reverse mortgage?
HECM products generally require the youngest borrower to be 62+, own the home (or pay off liens at closing), occupy it as a primary residence, and complete HUD-approved counseling. Proprietary products may use different age minimums. Credit/residual income and property standards still matter.
How much can I get?
Your principal limit depends on age, interest rates, home value, and product caps (HECM has a maximum claim amount). Older borrowers generally qualify for a higher percentage of value. A counselor and LO will estimate—not a website calculator alone.
Do I still own my home?
Yes. You keep the title. The lender places a lien. You must keep paying taxes, insurance, and required maintenance. Failure can trigger default.
What do heirs owe?
HECMs are non-recourse: heirs typically owe the lesser of the loan balance or the home’s value when settling (subject to HUD rules and timing). They can sell, pay off, or—in some cases—keep the home by satisfying the debt under program rules.
Is HUD counseling required?
Yes for HECM. Counseling helps you understand costs, obligations, and alternatives. Proprietary products may have their own counseling requirements.
What is HECM for Purchase?
A way for eligible seniors to buy a new primary home using HECM proceeds so they need less cash from savings—subject to HECM purchase rules.
Payout choices?
Common HECM options: line of credit, monthly tenure/term payments, or lump sum (with limits). Proprietary menus differ.
Effect on Social Security, Medicare, Medicaid/SSI?
Reverse mortgage proceeds generally do not affect Social Security or Medicare. They can affect needs-based programs like Medicaid or SSI if funds are retained as countable assets—talk to a benefits counselor and your reverse-mortgage counselor.
Is a reverse mortgage “free money” or “no payments”?
No. It is a loan that accrues interest and fees. You may not have a required monthly mortgage principal-and-interest payment, but you must still pay taxes, insurance, and upkeep—and the loan becomes due when maturity events occur.
Educational content only. Confirm with UMortgage+ powered by NEXA Lending, LLC.
Start with counseling and a careful review
a loan officer can explain HECM vs. proprietary and point you to HUD-approved counseling. Call (480) 233-7897.