Welcome to our guide on Home Equity Conversion Mortgage (HECM), the most popular type of Reverse Mortgage. This federally-insured loan, backed by HUD and FHA, provides homeowners aged 62 or older with a valuable financial tool to access a portion of their home equity.

What is a HECM Loan?

A Home Equity Conversion Mortgage (HECM) is a type of Reverse Mortgage insured by the Federal Housing Administration (FHA). It allows homeowners aged 62 or older to convert a portion of their home equity into cash without the need to sell their home. Unlike traditional mortgages, HECM borrowers do not make monthly payments. Instead, the loan balance increases over time as interest and fees accrue. A HECM loan can be used for various purposes, including paying off existing mortgages, medical bills, funding home improvements, or creating a financial safety net for unexpected expenses.

HECM Loan Benefits

Here are some of the key benefits of a HECM loan:

  • Elimination of Monthly Mortgage Payments: HECM loans eliminate the burden of monthly mortgage payments for qualified borrowers.
  • Retention of Homeownership: Borrowers can remain in their homes and maintain ownership while accessing their home equity.
  • Inheritance for Heirs: After paying off the HECM loan, any remaining equity in the home is inherited by the borrower’s heirs.

Eligibility for a HECM Loan

To qualify for a HECM loan, homeowners must meet certain criteria, including:

  • Age requirements (one borrower at least 62 years old)
  • Sufficient equity in the home
  • Occupancy of the home as the primary residence
  • Ability to pay off existing mortgage(s) with HECM loan proceeds
  • Financial eligibility criteria established by HUD

Borrowers’ Obligations

Borrowers are responsible for maintaining the property, paying property taxes, homeowners’ insurance, and any applicable homeowner association fees. Failure to meet these obligations may result in default and potential foreclosure. Additionally, borrowers must continue to meet certain conditions to maintain their loan in good standing, including maintaining the home according to FHA requirements and living in it as their primary residence.

Special Restrictions

HECM loans are subject to FHA lending limits and occupancy requirements. Borrowers must continue to live in the home as their primary residence to maintain the loan.


HECM loans typically involve upfront costs such as mortgage insurance premiums, origination fees, and closing costs, as well as ongoing costs such as interest and servicing fees. Generally, the only “Out of Pocket” costs you will incur are for Counseling and Appraisal.

Contact Us Today

Ready to explore the possibilities of a HECM loan? Contact us today to learn more about this valuable financial tool and how it can help you achieve your financial goals.

Please Note: Your current mortgage, if any, must be paid off using the proceeds from your HECM loan. You must still live in the home as your primary residence, continue to pay required property taxes, homeowners’ insurance, homeowners dues if any and maintain the home according to FHA requirements. Failure to meet these requirements can trigger a loan default that may result in foreclosure.

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