Reverse mortgages are increasing in popularity with seniors who have equity in their homes and want to remain in their homes or supplement their income. The only reverse mortgage insured by the U.S. federal government is a Home Equity Conversion Mortgage (HECM), which is only available through a Federal Housing Administration (FHA) approved lender. The HECM is the FHA’s reverse mortgage program that lets you withdraw a portion of your home’s equity for home maintenance, repairs, or general living expenses. HECM borrowers may reside in their homes indefinitely if property taxes and homeowner’s insurance are kept current.
The amount that will be available for withdrawal varies by borrower and depends on:
- Age of the youngest borrower or eligible non-borrowing spouse;
- Current interest rate, and
- Lesser of appraised value or the HECM FHA mortgage limit or the sales price.
If there is more than one borrower and no eligible non-borrowing spouse, the age of the youngest borrower determines the amount you can borrow.
You can also use a HECM to purchase a primary residence if you can use cash on hand to pay the difference between the HECM proceeds and the sales price plus closing costs for the property you purchase. To learn more about FHA’s HECM program:
- General Information
- Counselors
- To find a reverse mortgage counselor near you, search the HECM Counselor Roster or call (800) 569-4287.
- To find a reverse mortgage counselor who provides telephone and face-to-face counseling nationwide, use the HUD Intermediaries Providing HECM Counseling Nationwide list.
- Lenders
- To find a reverse mortgage lender, use the HUD Lender List Search.
Adjustable-rate loans are changing because a widely-used interest rate index expires in June.
LIBOR stands for London Interbank Offered Rate and is an index of interest rates commonly used in Home Equity Conversion Mortgages (HECMs). LIBOR expires on June 30, 2023, as part of a transition that has been planned for several years. Adjustable-rate HECMs based on LIBOR must change to a replacement index selected by the Secretary of HUD.
On May 2, 2023, FHA announced that the Secretary had selected the Chicago Mercantile Exchange (CME) Term Secured Overnight Financing Rate (SOFR) index to replace LIBOR. The CME Term SOFR index was chosen because it is comparable to the LIBOR index and will minimize disruption to borrowers from this transition.
The CME Term SOFR index can be found on the website of Refinitiv, the company publishing the index.
You will receive notices from your lender about any change to your interest rate. No action is required from borrowers, but if you have questions or concerns about the changes, contact your lender or servicer. Contact the FHA Resource Center at (800) CALL-FHA (1-800-225-5342). Persons with hearing or speech impairments may access this number via TTY by calling the Federal Information Relay Service at (800) 877-8339. You may also submit your question(s) to the FHA Resource Center by email at answers@HUD.gov, or you may also visit our online Knowledge Base at http://www.hud.gov/answers, available 24 hours a day/7 days a week.