An FHA reverse mortgage is designed for borrowers age 62 and older. It is also known as a Home Equity Conversion Mortgage. Home Purchase and Refinance Loans

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FHA Reverse Mortgage

Convert Your Equity into Income

FHA Reverse Mortgage - HECM

Established in 1934, The Federal Housing Administration (FHA) offers mortgage insurance on loans through FHA-approved lenders. The FHA provides this coverage for single and multi-family homes, and other approved purchases. The FHA does not issue loans, but FHA mortgage insurance is quite attractive for a prospective lender.

The main reason for this is simple; FHA mortgage insurance protects the lender's investment should a homeowner default on the mortgage. Loans insured by the FHA feature low down payments, and costs for FHA mortgage insurance are built into the mortgage payment.

An FHA reverse mortgage is designed for homeowners age 62 and older. It allows the borrower to convert equity in the home into income or a line of credit. The FHA reverse mortgage loan is also known as a Home Equity Conversion Mortgage (HECM), and is paid back when the homeowner no longer occupies the property.

There are requirements for an FHA-insured reverse mortgage or HECM;

  • The loan is based on the age of the youngest borrower if there are co-signers.
  • Homeowners are required to get consumer counseling and education before a HECM loan is approved.
  • Borrowers must own and live on the property as the primary residence.

Unlike other FHA loans, there are no income or credit qualifications for this type of loan. You will be required to have a current appraisal on the property as the amount of an FHA reverse mortgage is based on the home's value or the FHA insurance limit, whichever is lower. The FHA reverse mortgage;

  • Is a loan based on current interest rates.
  • Allows closing costs to be financed in the reverse mortgage.
  • Is for single-family homes or up to a four-unit home, but must be occupied by the borrower.
  • Is also permitted for FHA-approved condominiums and manufactured homes.

FHA reverse mortgages or HECM loans require the home to conform to FHA property standards and flood requirements. The FHA reverse mortgage has a variety ways the borrower can receive the money including monthly payments, a line of credit, or combinations of payments and credit. The borrower does not pay on these loans until the house is sold. The loan is repaid from the proceeds of the property sale including interest. Any remaining equity in the home after the loan has been repaid belongs to the homeowner.

If there is not enough money from the sale of the home to repay the loan in full, FHA insurance is used to pay the difference. If you need further clarification of the details of an FHA reverse mortgage, ask your loan officer to explain before you sign.

FHA Refinance Options for Homeowners

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FHA Loan Articles and Mortgage News

FHA Rehab Loan Options You Might Consider

January 17, 2024 - The FHA 203(k) rehabilitation mortgage is a type of FHA loan you can use to buy and renovate a home or refinance an existing mortgage and renovate the home simultaneously. There are options you need to know and a few things that you should cross off your list of options.

Refinancing With an FHA Loan in the New Year

January 9, 2024 - As mortgage rates begin to fall in 2024, some borrowers and potential FHA loan applicants want to know what kinds of refinance opportunities might exist in the new year and what property types. We examine some of the strongest options below.

Hope for Refinance Loans in 2024

December 22, 2023 - 2023 was not a great year to look for a refinance loan. Interest rates flirted with the 8% range in 2023, and anyone with an existing loan wouldn’t want to refinance into a higher rate. Rates began moving back to the 7% zone with many expecting further recovery and a downward trend.

Why FHA Home Loan Rates Are Recovering

December 14, 2023 - The Federal Reserve took measures to control inflation, including raising the cost of lending money by increasing the Federal Funds Rate. That rate, previously just above 0%, has risen as high as 5.5%. Those higher rates made people with lower rates stop plans to refinance.

Housing Market Predictions for 2024

December 13, 2023 - Real estate brokers and listing services typically publish articles discussing their predictions for the new year late in the current year. This year is no different. A wide range of financial and real estate pundits and publications have chimed in on what they view as the future of real estate.