Reverse mortgages explained for homeowners weighing their options

Learn how reverse mortgages work, who qualifies, what they cost, and the tradeoffs homeowners should weigh before tapping home equity during retirement.

Kevin Kelly, Senior Mortgage Advisor

Progress Lending, LLC

Phone: (602) 780-2939

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Reverse mortgages explained for homeowners weighing their options

October 26, 2026

A reverse mortgage flips the usual setup on its head. Instead of making payments to a lender, you receive money from your home equity and repay the loan later, usually when you sell, move out, or pass away. For some retirees, that structure solves a real cash flow problem. For others, it creates a costly one, and the difference usually comes down to how the loan fits into the rest of the household plan.

The most common version is the Home Equity Conversion Mortgage, which is insured by the Federal Housing Administration and available to homeowners age 62 and older. Borrowers can take the money as a lump sum, a monthly payment, a credit line, or some combination of those. Nothing is due while you still live in the home as your primary residence and keep up with property taxes, homeowners insurance, and upkeep. The loan is non-recourse, which means the balance generally cannot exceed the home's value when it is repaid, and neither the borrower nor the heirs will owe more than that. Federal rules also require a counseling session with an approved independent counselor before you can close, and I'd treat that session as the most useful hour you spend on the decision.

Reverse mortgages tend to make the most sense for homeowners who plan to stay put for a long time, have substantial equity, and need to stabilize cash flow without selling. Costs are real and they add up. Origination fees, mortgage insurance premiums, servicing charges, and closing costs get rolled into the loan balance, so they compound over time. With rates still elevated compared with the low-rate years, the amount available to borrow is generally smaller than it would have been, so the math needs to be run carefully rather than assumed. A loan officer can model several scenarios side by side so the choice rests on actual numbers, not assumptions.

Heirs deserve a seat at the table too. If the loan comes due after a death, the family usually has a window to sell the home, or pay off the balance and keep it, and it's worth knowing those options before a crisis forces a fast decision. Spouses need to be checked for eligibility and for how the loan treats them, since the rules around non-borrowing spouses have specific requirements. Anyone thinking about a reverse mortgage to pay off an existing mortgage should compare that against a traditional refinance or a plan to keep the current payment. The right answer depends on income, timeline, and how much the homeowner wants to leave behind.

A reverse mortgage can be a useful tool for the right homeowner, but it is not a free lunch, and it is not a last resort reserved for emergencies. Take the time to understand the mechanics, the total cost, and what it means for your family. That is where a good conversation starts.