In order to qualify for a HECM HUD reverse mortgage, you have to own a home that meets the minimum HUD property standards (see HUD’s website for standards), be 62 years old or older, have 75%-100% equity in your home, and get counseling from a government-approved counselor about the financial requirements of the HECM program. To locate an approved consumer counselor you can call the Housing Counseling Clearinghouse at 1-800-569-1287.
Single-purpose reverse mortgages have agency specific requirements. Most maintain an age restriction of 62 years or older, and they add other requirements like income restrictions and use restrictions for the funds acquired through their program.
3. How much money can you get?
The amount of money that you can get from your reverse mortgage depends greatly on the following issues:
Borrowers age
Value of the home
Location
Interest rates
4. How do you get the funds?
There are five different ways to receive your payments: tenure, term, line of credit, modified tenure, and modified term.
Tenure payments are made in equal monthly payments to the homeowner for as long as they live in the home, up to the full amount of the approved loan amount.
Term payments are equal monthly payments that are sent to the homeowner for a predetermined number of months
Line of credit payments are determined and cashed in when the homeowner needs the money. The homeowner can either makes a withdrawals from the line of credit until the credit line has a zero balance left available, or they can request that periodic payments be sent to them until the line of credit has a zero balance available for withdrawal.
Modified tenure is a combination of the tenure and line of credit payment options. The monthly payments continue as long as the homeowner lives in the house.
Modified term is a combination of the term and the line of credit payment options. Here monthly payments are sent to the borrower for a specific number of months until the line of credit is exhausted.
The money generated by a reverse mortgage is not considered as income and therefore it is not taxable, and it also won’t affect your Social Security or Medicare benefits.