Basics · 6 min read
What Is a Reverse Mortgage? A Plain-English Guide
A reverse mortgage lets homeowners 62 and older convert part of their home equity into cash — with no monthly mortgage payments required. Here's how it actually works.
The simple version
A reverse mortgage is a loan that lets homeowners aged 62 and older turn part of their home equity into cash. The key difference from a traditional mortgage: you don't make monthly payments to the lender. Instead, the loan is repaid later — typically when the last borrower sells the home, moves out, or passes away.
How the money comes to you
You can receive your funds in several ways:
- Lump sum — all at once, upfront
- Monthly payments — a steady stream of income for as long as you live in the home
- Line of credit — draw what you need, when you need it, and unused credit grows over time
- A combination of the above
What you still owe
You remain the owner of your home. You're still responsible for:
- Property taxes
- Homeowners insurance
- Basic maintenance and repairs
If you fail to keep up with these, the loan could become due.
When the loan is repaid
The reverse mortgage becomes due when the last remaining borrower (or eligible non-borrowing spouse) permanently leaves the home — by selling, moving, or passing away. At that point, the home can be sold to repay the loan, or heirs can refinance or pay it off and keep the home.
Because HECM reverse mortgages are non-recourse, you or your estate generally won't have to pay more than the home is worth, even if the loan balance grows larger. Heirs who keep the home won't have to pay more than 95% of its appraised value.
The bottom line
A reverse mortgage isn't a sale, and it isn't giving up your home. It's a financial tool that lets you tap into the value you've built — on your terms.