Eligibility

• To qualify for a reverse mortgage, a person must be age 62 or older. The applicant must completely own her home with a zero balance or a low balance on the existing mortgage. If a person has a low balance on an existing mortgage, the balance must be paid off at the time of closing on the reverse mortgage.
  
  

Types

• Reverse mortgages can only be applied to certain types of homes. The property criteria as outlined by the FHA says that the home included in a reverse mortgage must be a single-family home or a one- to four-unit home where the homeowner is one of the occupants. Condominiums and manufactured homes that meet FHA standards and are approved by the Department of Housing and Urban development (HUD) are also eligible.
  
  

Considerations

• The amount of money approved for a reverse mortgage depends on the age of the borrower, the current interest rate and the value of the home or FHA mortgage limits for the geographic area that includes the home. These lending decisions are made on a case-by-case basis.
  
  

Warning

• The FHA does not recommend using a service that charges a fee for referring a borrower to an FHA lender. This includes an estate-planning service. The FHA gives out free information and advises against consumers spending extra money and increasing their costs. The HECM has free or low-cost counseling available to elderly homeowners.
  
  

Heirs

• If a person with a reverse mortgage loan dies before the end of the loan, the FHA requires the heirs who inherit the property to repay the loan to the lender plus interest and fees incurred during the process of the loan. If any equity remains in the loan, it belongs to the heirs who inherit the home.