A reverse mortgage is a contract where a homeowner can access the equity in their home as cash from a lender. The lender pays that equity to the homeowner either in a single lump sum payment, a monthly disbursement over a set term period, or in monthly payments for as long as the homeowner resides in the home.
The basic requirements mandated by the FHA are you must be 62 or older, live in the house as your primary residence, maintain the property, pay your real estate taxes, and keep up with your homeowners insurance. Aside from those payments though, you don’t have to make a mortgage payment anymore. The lender pays you instead, thus making it “reverse.”
Some of the best reasons to consider a reverse mortgage are to solve a long-term problem while you have no plans to bequeath your home, you don’t plan on moving, and your spouse is also 62.
Reverse mortgages aren’t advised for people who are already financially distressed, because if they fail to comply with the contract they could lose their home to foreclosure.
We dove into over a dozen reverse mortgage lenders to assemble the best seven for you based on their costs, ease of qualification, nationwide coverage, speed and customer service, reliability, and overall reputation.
Best Overall: American Advisors Group (AAG)
As one of the largest reverse mortgage companies with a stable reputation, American Advisors Group (AAG) offers two critical features that make it the best company overall for reverse mortgages: several mortgage type options, and specialists to help you choose which one is best for you.
Free online loan calculator
Professional customer service
Loans up to $4 million
Fees can add up quickly
AAG, being the largest provider of reverse mortgages in the country with a reputation for stability in the financial industry for many years, gives you several borrowing strategies and the expertise to coach you through your decision. As our vote for the best overall reverse mortgage company, AAG should be the first place where you start asking questions.
Potential initial costs include, and are impacted by, interest rates, private mortgage insurance (PMI), origination fees, your payment option choice, appraisal and title search fees, and other closing costs. These are all up-front costs, and could total in the $6,000 to $8,000 range depending on the value of your home.
Throughout the contract, you’ll pay an annual PMI as well in addition to the up-front premium payment at closing, plus your real estate property taxes and homeowners insurance. This could total another $4,000 to $9,000 annually. You will not be making mortgage payments however as long as you live in the home. When you sell your home or pass away, the loan balance will have to be paid or else the lender will keep the home to settle the debt.
Within its program options, AAG offers a term reverse mortgage, where you choose the number of years you’d like to receive payments, and a tenure reverse mortgage, where you receive payments for as long as you live in the home and comply with the terms, such as paying your taxes and insurance.
You must be 62 years of age or older to qualify and have all or most of your mortgage paid down. The property must be your primary residence, and you will have to complete reverse mortgage counseling with an independent counseling agency before you close. Mobile homes usually do not qualify unless you have a HUD seal affixed to the outside of your home. This seal confirms that the home meets Manufactured Construction and Safety Standards.
AAG does not charge a servicing fee throughout the life of a reverse mortgage loan. The typical turnaround time is 30 days from application submission to close.
The company offers reverse mortgages to borrowers in every state and has physical offices in California, Hawaii, New York, Georgia, and Texas for more personalized customer service. You can also use its online calculator to get a quick estimate of what you may qualify for, or fill out the short online form to get an informational kit or to have a specialist call you.
Founded in 2004, AAG is one of the top reverse mortgage lenders in the United States. It is considered the biggest player in the industry. AAG is a member in good standing as a reverse lender with the National Reverse Mortgage Lenders Association (NRMLA) and continues to get outstanding reviews from its customer base. This is a testament to the company’s supportive customer service environment.
Best for Long Loan Terms: Quontic Bank
We like Quontic Bank’s flexible options for long loan terms. Its tenured loan pays you as long as you remain in the home, and you can adjust the terms by combining features from its other plans, like credit lines.
Mobile and online banking
Exemplary customer care
Has a long-standing reputation as a traditional bank
Limited branch access
Only does Home Equity Conversion Mortgage loans
With a long-tenured loan option, and the ability to mix payment features from other programs, Quontic Bank is our favorite for long term loans.
This lender is available nationwide and does not charge monthly servicing fees. However, charges for the administrative and customer service tasks over the life of a reverse loan may be included in the borrower's marginal interest that could amount to a fraction of a percentage point.
Initial closing costs include the first PMI, origination fees, appraisal, and title search fees. Expect these to be in the $6,000 to $8,000 range in total.
Throughout the contract, you’ll pay an annual PMI, which is 0.5% of the remaining loan balance, plus your real estate property taxes and homeowners insurance. This could total another $4,000 to $9,000 annually based on your local tax rate and insurance coverage. You will not be making mortgage payments as long as you live in the home. When you sell your home or pass away, the loan balance is paid, or else the lender will keep the home to settle the debt.
Like other HECM loan programs, you’ll qualify if you’re 62 or older, own your home in full or have a remaining balance low enough to be paid off by the reverse mortgage funds, and the mortgage is for your principal residence. Furthermore, you cannot be delinquent on any federal loans, and you must keep up with property maintenance, homeowners insurance, and property taxes. You must participate in a consumer information session given by a HUD-approved HECM counselor.
Quontic loan terms include lump sum payments, line of credit payouts, monthly reimbursements, and combination payouts. Loans are approved and closed between 30 and 45 days.
Established in 2009, Quontic Bank started as a brick-and-mortar institution in Astoria, New York. It's been reviewed very positively by their customer base and have comprehensive customer service. This lender has a national reputation for focusing on low-income, financially underserved consumers and businesses through its work with the U.S. Treasury Department’s Community Development Financial Institutions Fund.
Best for Good Credit: Liberty Reverse Mortgage
Liberty Reverse Mortgage offers you flexible terms, reverse mortgage specialization (it’s all they do) with a price match and closing date guarantee, making them our best for good credit borrowers.
Lends in every state except Utah
Free online resources for partners
Liberty Iron Clad Guarantee
Website provides detailed information
Rigid eligibility requirements
Online tools are somewhat limited
Best for good credit borrowers, Liberty Reverse Mortgage provides competitive pricing with flexible terms, can often bundle upfront fees into the loan, and will match or beat a competitor’s program offering with the Liberty Iron Clad Guarantee.
The expected fees are:
- FHA mortgage insurance equal to 2% of home value, capped at $13,593
- Origination fees set at 2% of the first $200,000 of your home’s value, plus 1% on remaining value, capped at $6,000
- Appraisal and title search fees
All in, depending on how much your home is appraised for, your initial expenses could be in the $5,000 to $19,000 range.
Liberty offers reverse mortgages in every state except Utah.
Its online application will uncover whether you are at least 62 years of age, if you’ve paid down all or most of your mortgage, have a credit score of at least 620, and if the property is your primary residence. Liberty and its financial counselors will verify if you can handle the ongoing maintenance, insurance, and tax expenses before it approves you for a reverse mortgage.
Single family and multifamily residences qualify, as do FHA-approved condos and manufactured homes.
Liberty on average completes the process in 60 days or less and, if it can’t close your mortgage within that period, the company deducts $500 from its closing costs for you.
The Liberty HECM and HECM for Purchase loan application processes typically close in 45 days. Loan terms include lump sum payments, line of credit payouts, monthly reimbursements, and combination payouts.
This company was founded in 2003 and later acquired by Ocwen Financial. The company has consistently been one of the top lenders in terms of origination volume, funding more than 64,000 seniors with $7.5 billion in loans since inception. Liberty is a member of the National Reverse Mortgage Lenders Association (NRMLA) and remains in good standing.
Best for Ease of Qualifications: Reverse Mortgage Funding
Reverse Mortgage Funding has a proprietary reverse mortgage product that permits non-FHA-approved condos, has lower borrower age requirements, and has higher equity access making it our best for easier qualification.
Offers educational resources, including an on-demand webinar
Provides price matching to compete with other lenders’ offered interest rates and fees
Offers $500 gift cards to borrowers for whom they cannot match a competitor’s rates
Qualify as young as 60 years old except in North Carolina, Texas, and Utah
Offers few online tools and resources
Limited loan offerings
Equity Elite® is not affiliated with the HECM loan program insured by the FHA
A non-borrowing surviving spouse who wants to reside in the home needs to have a plan to pay off the loan
Reverse Mortgage Funding focuses exclusively on reverse mortgages and is our favorite choice for borrowers looking for an easier qualification process. With its Equity Elite® reverse mortgage program, you can qualify at age 60 in most states, whereas traditional HECM loans need you to be at least 62. The program is also available to owners and buyers of non-FHA-condos, thus opening up an additional category of homes for qualification. If your home value and equity reach $4 million, you can qualify for a loan amount of that size, where a traditional HECM caps at $765,500.
An additional benefit Reverse Mortgage Funding offers is the Equity Elite® ZERO program, which eliminates almost all closing costs with a lender credit, has potentially lower interest rates, and carries no PMI, making it less expensive at closing, and even during the middle and end of the contract.
To qualify you must be 60 years of age or older; 62 in North Carolina, Utah, or Texas. You must have at least 50% of your mortgage paid down. The more you’ve paid down, the larger the loan you’ll qualify for. Like other lenders, you’ll need to meet with a licensed counselor to apply, and you must undergo a financial assessment and credit check to make sure you can cover the real estate and homeowners insurance costs on your residence.
Single family homes, townhouses, condos, and multi-family homes can qualify for Equity Elite®.
This company offers lump sum payments, line of credit payouts, monthly reimbursements, and combination payouts.
Reverse Mortgage Funding remains in contact with borrowers using the same team of dedicated loan officers throughout the life of the client's HECM contract providing the necessary assistance and expertise. The whole process takes 30 to 45 days to complete.
Established in July 2012, Reverse Mortgage Funding services all 50 states, Puerto Rico, and the District of Columbia but Equity Elite is currently available to only 22 states for now. It is also an active member of National Reverse Mortgage Lenders Association. This lender is rated by clients on LendingTree.com, Trustpilot, and ConsumersAdvocate.org as a notable consumer-friendly option.
Best Online Option: Longbridge Financial
Since reverse mortgages are largely defined by the FHA parameters, Longbridge Financial stands out as the best online option because of the easy-to-access educational materials on its website, and its best-in-the-business online quote generator.
Free identity theft protection
Does not sell closed contracts to other loan servicers who might charge added fees
No first-year withdrawal limits
Low upfront costs
Limited selection of proprietary loans
No regional branches to meet in person with a counselor
If you like to educate yourself before you speak to a salesperson, Longbridge Financial is our best online option for you. On their website, you can get an online quote and watch a short video to help you better understand reverse mortgages. There’s even a section for adult children to learn more about how their parents’ reverse mortgage could affect them. Furthermore, you can learn about what to expect from the reverse mortgage counseling and application processes. Applications can be completed over the phone and loan closing can be done in the borrower’s home.
Longbridge’s HECM products carry the same costs as all others, including origination, title, and escrow fees, appraisal costs, and PMI, all of which could run $4,000 to $8,000. For its proprietary, non-government reverse mortgage program, called Platinum Mortgage, you’re exposed to lower upfront costs, potentially lower interest rates, and higher-value home loans.
Longbridge is licensed in all 50 states and the District of Columbia.
Like the other lenders, you must be 62 years of age or older, you must have all or most of your mortgage paid down, the property must be your primary residence, and you’ll have to meet with a licensed counselor to apply and undergo a financial assessment and credit check.
The company does not levy monthly servicing fees and provides an option for no origination fees. This lender pledges to update borrowers at least weekly throughout their application process and to close loans within 45 days or less.
With Longbridge, you can receive your payout as a lump-sum payment, term payments, line of credit, or a combination.
Originally founded in 2012, the company focuses exclusively on reverse mortgages and offers a customer service guarantee. That guarantee includes a commitment that will confirm whether a reverse mortgage is in your best interest. Longbridge possesses excellent reviews on many third-party review sites, such as TrustPilot and ConsumersAdvocate.org. Customer reviews consistently praise its loan officers.
Best Reverse Mortgage for Purchase: Finance of America Reverse
Finance of America Reverse’s (FAR) HomeSafe program is a non-government reverse mortgage product that is ideal for seniors who want to move into a new home to downsize their living space, live in a home that better suits their physical limitations, or perhaps move closer to their kids, making it our best solution for using a reverse mortgage to purchase a new house or condo.
Competitive fixed interest rates
Loans up to $4 million
Proprietary product only in 26 states
Many people in their 60’s have raised their kids and find themselves empty-nesters in a large home with space they no longer need. FAR’s HomeSafe program is the best choice for people who want to combine the benefits of a reverse mortgage with buying a new home that better meets their location, size, and layout needs.
HomeSafe works well for owners of high-value homes because it provides access to up to $4 million of equity to be used towards a purchase of a new home or condo.
With HomeSafe, many of the closing costs can be rolled into the reverse mortgage. You still have to account for appraisal, title, and escrow fees. It may charge a servicing fee of up to $35 per month for some borrowers.
FAR’s HomeSafe, HomeSafe Flex, and its standard HECM reverse mortgage provide borrowers with multiple ways to access their proceeds, such as lump sum, term payments, and a line of credit.
To qualify, you must be at least 62, have most of your mortgage paid down, complete the HUD-required financial counseling, pass the financial assessment, and apply the reverse mortgage to your primary residence. There is no specific credit score requirement.
The financial assessment looks at credit history, property tax history, monthly residual income, and other financial metrics as needed. Many types of homes qualify including single family homes, properties with two to four units as long as you live in one of the units, FHA-approved condos for the HECM product, and even more condos for the HomeSafe program. Loans close within 30 to 45 days.
FAR’s HECM product is available in all 50 states, but HomeSafe is limited to 25 states plus Washington, D.C.
The company’s customer service team is more engaged than most; they encourage you to email and call them about your situation.
Since its establishment in October 2012, the company has stood out for its commitment to professionalism and customer service. The company has an average rating of 4.6 out of 5.0 stars on review sites like ConsumersAdvocate.org and Trustpilot. FAR is a member of NRMLA and the National Aging In Place Council, demonstrating their dedication to customer service and providing long-term counseling and advice.
What Is a Reverse Mortgage?
A reverse mortgage is a type of home loan that allows homeowners that are 62 or older to take out some of their home equity and convert it to cash. The lender distributes the funds in a lump sum, line of credit, structured monthly payments, or a combination of these three. The homeowner does not need to make monthly payments like they do in a forward mortgage. Instead, the loan balance is due when the homeowner passes away, moves away from the house, or sells the home.
In addition to being at least 62, the reverse mortgage can only be used for your primary residence. Single family homes are the easiest to qualify, and FHA-approved condos and manufactured (mobile) homes can sometimes qualify as well. Many condos and mobile homes do not.
Homeowners over 62 with substantial equity in their homes typically consider a reverse mortgage in order to supplement their income, or use the cash to pay an unexpected medical expense. For the reverse mortgage for purchase programs, people often use them to downsize their home, move to a warmer climate, or move closer to family.
Is a Reverse Mortgage a Good Idea?
A reverse mortgage is not an ideal financial choice for everyone. However, it may still be the best option in certain situations. This financial tool can provide additional retirement income or can be used to settle an existing mortgage. One benefit is that the proceeds are tax-free. On the other hand, if you fail to comply with the terms of maintaining the property, paying your property taxes, or paying your homeowners insurance, your loan balance becomes due immediately. If you’ve already spent that loan money elsewhere and have no resource to pay back the loan, the lender can foreclose on your home.
This is a process to consider with caution. Ask questions until you understand the potential outcomes. The federal government does require counseling when you begin this process, and the loans are non-recourse, which means the amount you owe cannot exceed the value of the home. Yet even with these safety nets, there are still predatory lenders in the field and even ways to be scammed by other players like contractors, relatives, and realtors.
What Are the Types of Reverse Mortgages?
There are different types of reverse mortgages to fit different situations and needs. A single-purpose reverse mortgage, like a home equity conversion mortgage (HECM) for purchase, defines specifically how the funds can be used. A HECM for purchase means the homeowner is selling their home to buy another one, and they are using the proceeds from the reverse mortgage to apply toward the purchase of the new home. Other reasons why a lender may approve of a single-purpose reverse mortgage are to pay for property taxes, maintenance, or homeowners insurance.
A standard home equity conversion mortgage, allows you to use the funds for whatever you want, as long as you pay off any remaining mortgage balance first. You must still be 62 or older, applying this mortgage to your primary residence, and you must keep up with property maintenance, real estate taxes, and homeowners insurance to meet the terms of the contract.
Some lenders have their own proprietary reverse mortgage product. These are not insured by the FHA, which opens up more possibilities for easier qualification, as well as more risks. Some easier terms include qualifying at age 60 instead of 62, being able to apply the reverse mortgage to a non-FHA-approved condo or manufactured home, or accessing equity lending limits above the FHA limit of $765,600.
Other ways to categorize reverse mortgages are by how the funds are distributed. For example, some are given to the homeowner as a lump sum at closing, others opt for a monthly payment for as long as they are in the home, or for a set period of time called a term. Many lenders will also have a way to let you do a combination of three of these payments.
How We Chose the Best Reverse Mortgages
We reviewed more than a dozen reverse mortgages before choosing these top seven. We summarized the pros and cons for you, investigated the costs at the beginning, middle, and end of the reverse mortgage contracts, and highlighted the key terms.
Borrower criteria and the types of homes that qualified mattered as well. For most of the industry, the qualifications are the same because they are driven by the FHA, but certain proprietary reverse mortgages offer interesting options, both for the borrower’s profile and the home style.
Time to close, customer service, reputation, and nationwide lending were also major factors in selecting our winners for each category.