Product Basics
Reverse Mortgages Can Help Your Senior Customers
CONSUMERELIGIBILITY
Key requirements for applying
for a reverse mortgage loan
PRODUCTFEATURES
A full suite of reverse
mortgage borrowing options
CONSUMER ELIGIBILITY
- To be eligible for a reverse mortgage (HECM loan), some key requirements are:
- The youngest borrower on title must be at least 62 years of age
- Borrower must live in the home as their primary residence and have sufficient equity
- Borrower must be able to pay off the existing mortgage using the loan proceeds
- Live in a single family, two-to-four unit owner-occupied home, townhouse, approved condominium or manufactured home
- Must meet financial eligibility criteria as established by HUD Obligations.
- In addition to eligibility, the following conditions must be met:
- Complete a HUD approved counseling session
- Maintain your home according to FHA requirements
- Continue to pay property taxes and homeowners insurance
Close
PRODUCT FEATURES
- Fixed and variable rate options
- Home purchase program available (HECM for Purchase)
- Eliminates monthly mortgage payments
- Homeowner retains the title to their home
- Flexible Disbursement options (lump sum, term, tenure, line of credit or a combination of payments)
- The borrower may need to set aside additional funds from the loan proceeds to pay for taxes and insurance.
- Consumer safeguards, including HUD 3rd party counseling and mandatory Mortgage Insurance Premiums (MIP)
Close
BORROWERPROTECTIONS
Reverse mortgages are
better than ever
LOANSCENARIOS
Learn how reverse mortgages work
CONSUMERELIGIBILITY
Key requirements for applying
for a reverse mortgage loan
CONSUMER ELIGIBILITY
- To be eligible for a reverse mortgage (HECM loan), some key requirements are:
- The youngest borrower on title must be at least 62 years of age
- Borrower must live in the home as their primary residence and have sufficient equity
- Borrower must be able to pay off the existing mortgage using the loan proceeds
- Live in a single family, two-to-four unit owner-occupied home, townhouse, approved condominium or manufactured home
- Must meet financial eligibility criteria as established by HUD Obligations.
- Complete a HUD approved counseling session
- Maintain your home according to FHA requirements
- Continue to pay property taxes and homeowners insurance
Close
PRODUCTFEATURES
A full suite of reverse
mortgage borrowing options
PRODUCT FEATURES
- Fixed and variable rate options
- Home purchase program available (HECM for Purchase)
- Eliminates monthly mortgage payments
- Homeowner retains the title to their home
- Flexible Disbursement options (Lump Sum, Term, Tenure, Line of Credit or a combination of payments)
- The borrower may need to set aside additional funds from the loan proceeds to pay for taxes and insurance.
- Consumer safeguards, including HUD 3rd party counseling and mandatory Mortgage Insurance Premiums (MIP)
Close
Reverse Mortgage Comparison
| Reverse Mortgage | Home Equity Line of Credit | Forward Mortgage | Sale | |
|---|---|---|---|---|
| Key Benefits | No monthly payments; limited income requirements | Low upfront cost; quick to get | Can extract most equity | Obtain more appropriate housing; only option for many |
| Key Drawbacks | Complex product features | Income required; At year 10, payments balloon and availability goes away | Largest monthly payment; income required | Requires stressful relocation; highest transaction costs |
| Ability to Age in Place | Yes |
Yes |
Yes |
No |
| Underwriting | Primarily asset-based |
Stringent income requirements |
Income and asset requirements |
Not applicable |
| Closing Costs | Higher, but often financed. Low-Fee Options |
Low |
Can be high, usually paid in cash |
Highest, but deducted from proceeds |
| Available Proceeds | 40%–60% of home value |
Up to 80% of home value |
Up to 80% or higher, depending on loan |
100% |
| Payment to Borrower | Line of credit, lump sum or monthly annuity |
Line of credit |
Lump sum |
Lump sum |
| Loan Repayment | Due when last borrower dies or moves out |
Monthly payments with minimum required. Start paydown at year 10 |
Principal and interest payments over time |
Not applicable |
| Reverse Mortgage | |
|---|---|
| Key Benefits | No monthly payments; limited income requirements |
| Key Drawbacks | Complex product features |
| Ability to Age in Place | Yes |
| Underwriting | Primarily asset-based |
| Closing Costs | Higher, but often financed. Low-Fee Options |
| Available Proceeds | 40%–60% of home value |
| Payment to Borrower | Line of credit, lump sum or monthly annuity |
| Loan Repayment | Due when last borrower dies or moves out |
| Home Equity Line of Credit | |
|---|---|
| Key Benefits | Low upfront cost; quick to get |
| Key Drawbacks | Income required; At year 10, payments balloon and availability goes away |
| Ability to Age in Place | Yes |
| Underwriting | Stringent income requirements |
| Closing Costs | Low |
| Available Proceeds | Up to 80% of home value |
| Payment to Borrower | Line of credit |
| Loan Repayment | Monthly payments with minimum required. Start paydown at year 10 |
| Forward Mortgage | |
|---|---|
| Key Benefits | Can extract most equity |
| Key Drawbacks | Largest monthly payment; income required |
| Ability to Age in Place | Yes |
| Underwriting | Income and asset requirements |
| Closing Costs | Can be high, usually paid in cash |
| Available Proceeds | Up to 80% or higher, depending on loan |
| Payment to Borrower | Lump sum |
| Loan Repayment | Principal and interest payments over time |
| Sale | |
|---|---|
| Key Benefits | Obtain more appropriate housing; only option for many |
| Key Drawbacks | Requires stressful relocation; highest transaction costs |
| Ability to Age in Place | No |
| Underwriting | Not applicable |
| Closing Costs | Highest, but deducted from proceeds |
| Available Proceeds | 100% |
| Payment to Borrower | Lump sum |
| Loan Repayment | Not applicable |
Source: HECM dataset, MetLife studies, AARP Research.
Federal Housing Administration (FHA) mortgage insurance premiums (MIP) will accrue on the reverse mortgage loan balance. The borrower will be charged an initial MIP at closing. The initial MIP will be 2% of the home value not to exceed $13,593. Over the life of the loan, the borrower will be charged an annual MIP that equals .5% of the outstanding mortgage balance.
The borrower’s current mortgage, if any, must be paid off using the proceeds from the reverse mortgage loan. They must still live in the home as a primary residence, continue to pay required property taxes, homeowners insurance, 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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