With any type of home equity financing, there are certain requirements and borrower responsibilities in order to qualify for the loan. To help you better determine your eligibility for a reverse mortgage, we’ve created this simple overview of the basic Home Equity Conversion Mortgage (HECM) qualifications.
Age – You must be 62 years of age or older. This also applies to all borrowers that are listed on the home’s title.
Property – The home must be your primary residence and you must live in the home. You are responsible for remaining current on real estate taxes, homeowners insurance, and property maintenance. Other minimum property requirements set by the U.S. Department of Housing and Urban Development (HUD), include:
- Single-family homes, or 2-to-4-unit properties with one unit occupied by you
- Manufactured homes (built after June 1976) that meet FHA requirements
- Condominiums that are FHA-approved
Existing mortgage – Having a mortgage on your home isn’t necessarily a problem. Your reverse mortgage would first be used to pay off the existing mortgage(s), and then any remaining proceeds would be yours. Many homeowners use a reverse mortgage for this purpose, freeing themselves from the burden of monthly mortgage payments.
Significant equity in your home – In general, you will need approximately 50% equity in your home. The more equity you have and the less you owe on your current mortgage (because you must use the reverse mortgage to pay off any existing home loan first), the more money you’ll receive to use any way you wish.
Independent Counseling – As part of the process, it’s required you receive independent counseling in order to complete your application, with any lender. Counseling is provided by a HUD approved counseling agency. We go in depth about counseling in our blog “Independent Reverse Mortgage Counseling: What You Need to Know”.
If you’re interested in finding out how much you could qualify for, use our reverse mortgage calculator. To get the cash you need to supplement your income, cover health care expenses, or take a trip, a reverse mortgage may be the home equity loan right for you.
For more information on qualifications click here.
Questions? We’re here to help. Call Longbridge Financial at (855) 523-4326.