A reverse mortgage is a loan for homeowners aged 62 and older that converts home equity into cash — a lump sum, a credit line, or monthly payments — with no monthly repayment. Instead of shrinking, the balance grows as interest and insurance premiums are added to it, and the whole loan comes due only when the last borrower sells, moves out permanently, or dies.
Nearly all reverse mortgages in the US are HECMs (Home Equity Conversion Mortgages), insured by the FHA. How much you can access is set by HUD's principal limit factor — a percentage of the home's value that rises with the youngest borrower's age and falls as interest rates climb. Upfront costs come out of that limit: a 2% FHA insurance premium, an origination fee, closing costs, and the payoff of any existing mortgage.
The FHA insurance buys an important guarantee: the loan is non-recourse, so neither you nor your heirs can ever owe more than the home sells for. The obligations that remain are property taxes, homeowners insurance and upkeep — falling behind on those can make the loan due early.
A reverse mortgage suits owners who plan to stay put for years and need income or a reserve more than they need to preserve an inheritance. To see real numbers for your age and home value, try the reverse mortgage calculator, or read the full guide to how HECMs work.