Check your eligibility for a reverse mortgage loan

In a regular mortgage, you pay the lender over a period to eventually own the home. In a reverse mortgage, the lender pays you as an advance towards the equity of your home. The amount is tax-free and you do not have to repay it as long as you live in the home.

Here are the basic reverse mortgage eligibility criteria:


To qualify for this type of mortgage, you need to be 62 years or older. Under the new regulations that relax norms for a non-borrowing spouse, you may still qualify for the loan even if your spouse is less than 62 years old.

Balance home equity

Another major requirement to qualify for a reverse mortgage is that you should have a significant equity balance in the home. You must have at least 50% home equity while applying for the loan.


The third reverse mortgage eligibility criterion is that the home should be self-occupied. Moreover, it should be your primary residence. Investment properties are not eligible for reverse mortgage loans.


When you apply for a reverse mortgage loan, you need to undergo a counseling session from a Department of Housing and Urban Development (HUD) approved agency. During the session, you will be given all information related to such loans and will also help you understand if a reverse mortgage is appropriate to your requirements or not.

In addition to the aforementioned eligibility criteria, the home on which you want to avail for the loan must also adhere to certain qualification norms as listed below:

  • Such loans are available for all kinds of self-occupied homes, such as FHA-approved condominiums, two-to-four unit multi-family properties, single-family homes, and townhouses.
  • The home must be in good condition with both the interiors and exteriors in working order. Additionally, it should be well-maintained with no termite problems, working garage doors, and sound electrical outlets.
  • Your home will need to be appraised by a reliable and approved appraiser.

You also need to meet certain financial requirements to qualify for a reverse mortgage loan. These are listed as follows:

  • Your income should be adequate to meet property-related expenses, such as insurance, taxes, Homeowners Association (HOA) fees, and any other applicable charges.
  • The lender may also look at your credit report to determine your current income and assets to ensure you are able to meet all your present financial obligations.

Although a reverse mortgage loan may help meet your financial requirements during your post-retirement years, it is important to remember a few things about these loans. These include:

  • The lender does not levy additional costs and other fees.
  • The interest may change as reverse mortgage offers variable rates.
  • Because the interest is added to the principal amount, the outstanding balance increases over the years.
  • The interest on the loan is not deductible from your income tax returns until the amount is repaid either in full or partially.

In case your spouse is not part of the loan, your spouse may reside in the home post your demise as long as all expenses like taxes and insurance are paid by your surviving spouse.