A reverse mortgage is a type of loan available to homeowners aged 62 and older that allows them to convert part of the equity in their homes into cash. Unlike a traditional mortgage, with a reverse mortgage, the lender makes payments to the borrower, and the borrower is not required to make monthly mortgage payments. The loan is repaid when the borrower no longer lives in the home, usually by selling the home. The amount the homeowner owes to the lender goes up over time because interest and fees are added to the loan balance each month.

Reverse mortgages are increasing in popularity with seniors who have equity in their homes and want to remain in their homes or supplement their income. Seniors may use reverse mortgages to help supplement their Social Security or other retirement income, pay for home repairs, or cover medical expenses. However, they come with risks, and seniors should be careful to make the most of the loan by budgeting carefully to avoid running out of funds too soon and to be sure that taxes and insurance are paid as agreed.

The only reverse mortgage insured by the U.S. Federal Government is called a Home Equity Conversion Mortgage (HECM), and it is only available through a Federal Housing Administration (FHA)-approved lender. To find a reverse mortgage counselor or lender, seniors can use the HECM Counselor Roster, the HUD Intermediaries Providing HECM Counseling Nationwide list, or the HUD Lender List Search.