A reverse mortgage lets you tap into some of your home equity without selling the property or making monthly payments. Available to homeowners age 62 and up, reverse mortgages can provide an additional income stream during retirement. You can apply for a reverse mortgage by yourself or with a spouse. But what happens if you live with a romantic partner or a roomie—can cohabiting people get a reverse mortgage? Here's a quick look at reverse mortgages when the co-borrowers aren't married.
- A reverse mortgage allows older homeowners to tap into their home equity without moving or selling their homes.
- To qualify for a reverse mortgage, you must be at least 62 years old and have considerable equity in your home.
- Married or unmarried couples can be co-borrowers on a reverse mortgage.
- Your surviving spouse or partner who is a co-borrower on the reverse mortgage can stay in the home even if you die or move out (e.g., to enter an assisted living facility).
- Your children, relatives, and other dependents who aren't co-borrowers—or a spouse who doesn't qualify as an eligible non-borrowing spouse—must pay off the loan to stay in the house if you die or move out.
What Is a Reverse Mortgage?
Homeowners who are at least 62 with substantial equity in their homes may qualify for a reverse mortgage. This loan lets you convert some of your home equity into cash without selling the house or making monthly payments. Instead, the lender gives you an advance on part of your home equity, as a lump sum, a monthly amount, or a line of credit.
You can use the money to pay for things like daily living expenses, medical bills, or home repairs—or even a new house, if you have a HECM for Purchase loan. Interest and fees accrue over the life of the loan, which becomes due when you sell the home, move out, fall behind on property taxes, or die.
Reverse Mortgage Borrower Requirements
Reverse mortgages are designed to help older homeowners access their home equity, providing a potentially much-needed source of income when they might be house rich, cash poor.
The most widely used reverse mortgage is the home equity conversion mortgage (HECM), insured by the Federal Housing Administration (FHA) and issued through FHA-approved lenders. If you apply for a HECM, the lender will verify your income, assets, monthly living expenses, credit history, and timely payment of real estate taxes and home insurance premiums. Additionally, you must:
- Be 62 or older (some proprietary reverse mortgages will accept borrowers as young as 55).
- Own the property outright or have considerable equity in it—generally, at least 50%.
- Live in the home as your principal residence.
- Not be delinquent on any federal debt (e.g., taxes and student loans).
- Have the financial resources to maintain the house and pay property taxes, insurance, and any HOA fees.
- Attend a session with a counselor approved by the Department of Housing and Urban Development (HUD).
Be sure to shop around and compare the costs of the reverse mortgage loans available to you. While lenders generally charge the same mortgage insurance premiums, other loan costs—including origination fees, closing costs, servicing fees, and interest rates—vary by lender.
Can Unmarried Couples Get a Reverse Mortgage?
Anyone can be a co-borrower on a reverse mortgage if they meet the eligibility requirements. That means you can include your spouse, romantic partner, or roommate on your reverse mortgage documents.
A co-borrower can remain in the home without paying anything toward the reverse mortgage balance should the other co-borrower move out or pass away. The loan becomes due when the surviving co-borrower sells the home, moves out, falls behind on property taxes (or otherwise fails to meet the loan terms), or dies.
A spouse or partner who is a co-borrower on a reverse mortgage can remain in the home without being required to pay off the balance until they sell the home, move out, or die.
Partners or Roommates Who Aren't Co-Borrowers
A partner or roommate who is not listed as a co-borrower on your reverse mortgage would need to establish their legal right to remain in the home after you pass away. They will likely have to vacate the property if they're not listed on the home's title, deed, or other ownership rights documents. Even if they could remain in the house, the reverse mortgage balance would become due—a responsibility that would fall to your estate or heirs.
Does a Spouse Have To Be on a Reverse Mortgage?
There are no requirements for both spouses to be included on a reverse mortgage application. However, your spouse may miss out on certain rights and protections.
For example, if you die and your spouse wasn't on the original reverse mortgage, they won't be able to withdraw additional funds and will be required to repay the amount borrowed. But they may be able to defer repayment and remain in the home if they maintain the home and stay up to date on the property taxes and insurance.
When Do I Have To Repay a Reverse Mortgage?
Reverse mortgage loans generally become due when you sell the home, move out (e.g., to live in an assisted living facility), fall behind on your property taxes, or die. Proceeds from the home's sale can be used to pay off the loan, with any remaining funds going to you or your estate.
What Is a Non-Recourse Clause?
If your reverse mortgage has a non-recourse clause, you (or your estate) can't owe more than the value of your home when the loan becomes due and the home is sold. So, if you or your heirs want to pay off the loan and keep the home, you wouldn't pay more than the home's appraised value.
The Bottom Line
Co-borrowers on a reverse mortgage don't need to be married or related—so you and your partner or roomie can apply together. Of course, both borrowers must still meet the loan requirements, and you must have enough equity in the home to qualify.
Keep in mind that the high costs of reverse mortgages make them a poor choice for many homeowners. If you need cash—but are on the fence about getting a reverse mortgage—you might want to consider a mortgage refinance, a home equity loan, or downsizing your home and using the extra cash to cover living expenses, medical bills, and anything else.