Reverse mortgages allow homeowners to turn their home equity into retirement income. These products are designed for older people who own their homes outright or have paid down most of the mortgage. Qualifying for a reverse mortgage can depend on a number of factors, including your age and, if you’re married, your spouse’s age.
- A reverse mortgage offers a way for homeowners to use the equity in their homes to fund a stream of income for retirement.
- Borrowers must be at least age 62 to qualify for a home equity conversion mortgage (HECM), which is a reverse mortgage that’s backed by the federal government.
- Some reverse mortgage lenders that are not affiliated with the HECM program may offer reverse mortgages to borrowers younger than 62.
- A spouse who is under age 62 can be listed on an HECM as an eligible non-borrowing spouse.
Reverse Mortgage Basics
A reverse mortgage is an arrangement in which a homeowner uses their home equity to generate income for their retirement, taken as a lump sum, in regular payments, or as a line of credit. They can then use the money to pay off debt, cover medical bills, or meet day-to-day living expenses. This may sound like a home equity loan or a home equity line of credit (HELOC), but it’s not.
A reverse mortgage company makes payments to the homeowner. Interest and fees accumulate on the reverse mortgage balance. No payment is due against the balance until the homeowner ceases to use the home as their principal residence. This can happen if the homeowner sells the property, moves out, or dies.
Home equity loans and HELOCs, on the other hand, require payments to the lender during the homeowner’s lifetime. Home equity loans usually have fixed interest rates, while HELOCs typically have variable rates. In either case, the home serves as collateral for the loan, and defaulting could lead to a foreclosure proceeding.
It’s wise to consider the pros and cons of a reverse mortgage before choosing to pursue one. If you decide that you do want one, they are offered by federal, state, and local government agencies, nonprofit organizations, and private lenders. Reverse mortgage products that are backed by the federal government are called home equity conversion mortgages (HECMs). This type of reverse mortgage product has strict requirements for approval, including a minimum age threshold.
If a homeowner dies, their heirs are responsible for paying the reverse mortgage balance if they want to retain ownership of the property.
Reverse Mortgage Age Requirements
Reverse mortgages are, by nature, designed for people who have paid off their homes or have very little remaining on their mortgage, leaving them with substantial equity. Typically, this means homeowners who have already retired or are approaching retirement age. The HECM program imposes a minimum age requirement of 62 to qualify; there are no upper age limit thresholds.
Aside from age, there are other requirements to qualify for an HECM. Homeowners must:
- Use the home as a principal residence
- Have paid off all or most of the mortgage
- Not be delinquent on federal debt
- Have sufficient financial resources to pay for home maintenance and upkeep, insurance, and property taxes
- Keep their home in good shape
- Attend U.S. Department of Housing and Urban Development (HUD)-approved consumer counseling
Additionally, the home must be an eligible property type, which includes single-family homes; two- to four-unit homes, with one unit occupied by the borrower; Federal Housing Administration (FHA)-approved condos; and FHA-approved mobile homes.
It may be possible to find reverse mortgage programs that allow you to qualify at age 60 or even 55, but they won’t be backed by the federal government.
Non-Borrowing Spouses Under Age 62
Age differences can present a snag when a married couple is interested in getting a reverse mortgage through the HECM program. If one spouse is at least age 62 but the other is not, then the younger spouse cannot be listed on the reverse mortgage as a co-borrower. They can, however, be classified as an eligible non-borrowing spouse. This can be important for establishing residency rights later if the borrowing spouse dies first.
An eligible non-borrowing spouse is someone who is named in the reverse mortgage loan documents but is not listed as a borrower. They have to be married to the borrower when the reverse mortgage is taken out, remain the borrower’s spouse during their lifetime, and continue to live in the home that secures the reverse mortgage as their principal residence.
A borrower cannot add a spouse or family member to a reverse mortgage after the fact.
Age doesn’t determine eligible non-borrowing status. You can be five, 10, or even 20 years younger than your spouse, and it won’t matter. You only need to have been married to the borrower, live in the home, and be listed in the loan documents. If you can’t meet these requirements, then you’re considered to be an ineligible non-borrowing spouse.
The distinction is important because if you are listed as an eligible non-borrowing spouse, you have the right to remain in the home if your borrower spouse dies. You need to continue paying homeowners insurance, maintenance, and property taxes, but you aren’t obligated to pay anything toward the HECM balance. Ineligible non-borrowing spouses don’t enjoy these protections.
How Old Do You Have to Be to Get a Reverse Mortgage?
The minimum age requirement for a home equity conversion mortgage (HECM) is 62. A spouse who is under 62 can be added to an HECM as an eligible non-borrowing spouse. Reverse mortgage lenders not affiliated with the HECM program may set the age requirement below 62.
Is There a Maximum Age Limit for Reverse Mortgages?
Generally, no. What’s more, being older could work in your favor, as your shorter life expectancy may allow you to qualify for better reverse mortgage terms.
Can Anyone Take Out a Reverse Mortgage?
No. There are always minimum age requirements, as well as other caveats. If you’re applying for an HECM, you must be at least 62 years old and be using the home as your principal residence. You must additionally have paid off 50% of the mortgage. The general rule is that you must have at least 50% equity in the home.
The Bottom Line
Reverse mortgages have a minimum age requirement. If you’re under age 62, an HECM is not available to you. However, you can consider other reverse mortgage options that may allow you to borrow at a younger age. Just be sure that these non-government-backed mortgages are offered by reputable lenders.
Before committing to a reverse mortgage, take time to research the best reverse mortgage companies. Be careful to read the fine print to make sure that you understand what you’re signing. There are unscrupulous lenders out there looking to take advantage of vulnerable older people.