Reverse mortgages: a practical guide for older homeowners
August 21, 2026
Reverse mortgages have a reputation problem, and most of it is outdated. The product that dominated headlines in the early 2000s is not the same one available to homeowners today. For older homeowners weighing their options in retirement, that distinction matters more than they might realize.
A reverse mortgage lets a qualifying homeowner, typically age 62 or older, convert part of their home equity into cash without making monthly mortgage payments. The homeowner retains title to the home and continues to live in it. The loan balance grows over time and is repaid when the borrower sells the property, moves out permanently, or passes away. Because no monthly payment is required, the loan is designed to supplement retirement income rather than replace it. The federally-insured HECM program remains the most common option, though proprietary products exist for higher-value homes.
Funds can be taken as a lump sum, a line of credit, monthly payments, or some combination of each. The line of credit option has become especially popular because unused funds grow at the loan's interest rate plus mortgage insurance premium over time, creating a built-in reserve. A lump sum works well for borrowers with a specific expense in mind, like paying off an existing mortgage. Monthly tenure or term payments can function like a small pension, though the total amount available depends on the home's appraised value and the borrower's age.