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Home equity guide

Reverse mortgage pros and cons

Your next move starts with the right questions. Compare the structure, costs, and tradeoffs before you choose.

Published by Equity Edge Lending Inc.
Updated October 24, 2026 · Primary sources

The short answer

A reverse mortgage is a home loan secured by the home. A Home Equity Conversion Mortgage (HECM), the most common type, is only for homeowners who are 62 or older. Borrowers do not make monthly mortgage payments. The loan is repaid when the borrower no longer lives in the home. Interest and fees are added to the balance each month.

The sentences on this page follow the Consumer Financial Protection Bureau, the U.S. Department of Housing and Urban Development, and the Federal Trade Commission. They describe HECMs. The FTC also describes single-purpose and proprietary reverse mortgages, which are different loans. This page does not quote a rate, a fee, or a loan limit, and Equity Edge Lending does not offer a reverse mortgage or a HECM here.

A HECM is only for homeowners who are 62 or older
Borrowers do not make monthly mortgage payments
Interest and fees are added, so the balance grows
Taxes, insurance, and upkeep are still required

First published October 24, 2026 · Company NMLS #2808857

Pros the agencies describe

These are features the cited pages state. They are not a recommendation, and they are not a statement that a HECM will fit a particular household.

No monthly mortgage payment. The CFPB explanation of a reverse mortgage says borrowers do not make monthly mortgage payments. The title to the home remains in the borrower's name. The home is security for the loan.
Repayment waits until the borrower no longer lives in the home. The same CFPB page says the loan is repaid then, usually by selling the home.
The borrower can remain if taxes and insurance stay current. HUD's HECM page says HECM borrowers may reside in their homes indefinitely as long as property taxes and homeowner's insurance are kept current.
A HECM balance above the home's value does not automatically become a bill for the difference. The CFPB shortfall answer says that if the loan balance is more than the value of the home, you or your heirs may not have to pay the difference. If the home is sold for the appraised fair market value, mortgage insurance pays the remaining balance. The CFPB limits that answer to HECMs.
Most reverse mortgages can be canceled for three business days. The CFPB says that within three business days after closing, you can cancel for any reason, without penalty. The FTC describes the same right of rescission.

Cons the agencies describe

The balance grows. The CFPB says interest and fees are added to the loan balance each month. The amount owed goes up, not down, and home equity decreases. The CFPB says a reverse mortgage is not free money.
Property charges and upkeep can still cost the home. The CFPB borrower-responsibilities page says you must pay property charges, such as property taxes and homeowners insurance, on time, keep the home in good repair, and use it as your principal residence. If you do not meet those requirements, you could lose the home to foreclosure.
Leaving later can be harder. The FTC reverse mortgage article says a reverse mortgage increases your debt and can use up your equity. It says you could get nothing when you or your estate sells the home, and you could come up short if you want to move.
Costs can be higher than other home-secured borrowing. The FTC says the fees and other costs can be higher than a home equity loan or a home equity line of credit. This page does not state a fee or a rate.
An existing mortgage and federal debt have to be cleared. The CFPB eligibility answer says you must own the home outright or be able to pay off the mortgage balance at closing, using your own funds or money from the reverse mortgage. It also says you cannot owe federal debt, such as federal income taxes or federal student loans, unless you pay that debt, which may be done with money from the loan.
Heirs may have to pay the full balance to keep the home. The CFPB heirs answer says that if there is no coborrower and no eligible nonborrowing spouse, heirs must pay the full loan balance to keep the home. If the home is worth more than the amount owed, they can sell, repay the loan, and keep the difference.
HECM insurance is not homeowner protection. The FTC says HECMs are federally insured by HUD, and that this insurance does not protect the homeowner. The FTC says it exists so the lender gets paid if the borrower is not able to repay.
The VA does not offer this loan. The CFPB says the Department of Veterans Affairs does not offer any reverse mortgage loans, and that some ads falsely imply VA approval.

Who a HECM can fit, and who it usually does not

The agencies do not rank households. They do state who can get a HECM and what the borrower must keep doing.

Who it can fit

The CFPB says a HECM is only for homeowners who are 62 and older, and that the home must be the principal residence, meaning the borrower lives there the majority of the year. HUD describes the program for seniors who have equity and want to remain in the home or supplement income, and says borrowers may stay as long as property taxes and homeowner's insurance are kept current. The CFPB also says the borrower must have enough money, or agree to set aside part of the loan funds, for ongoing property charges, maintenance, and repairs, and that the home must meet property standards.

Counseling is a requirement, not an optional tip. The CFPB says you must receive counseling from a HUD-approved reverse mortgage counseling agency to discuss eligibility, the financial implications, and other alternatives. The FTC says a person applying for a HECM must meet with a counselor from an independent government-approved housing counseling agency first. HUD tells readers to search the HECM counselor roster or call (800) 569-4287.

Who it usually does not

A homeowner under 62. The CFPB says a HECM is available only to homeowners who are 62 and older.
A homeowner who cannot pay property taxes and insurance, keep the home in good repair, or live there as the principal residence. The CFPB says failing those duties can lead to foreclosure.
A homeowner who expects to move. The FTC says the loan generally must be paid back when you die or move, and that using up equity can leave nothing for a later move. The CFPB says that if you are away for more than six months for non-medical reasons and no co-borrower lives in the home, the home is no longer the principal residence and the loan must be paid back or satisfied by selling the property or a deed in lieu of foreclosure. Anyone living there must move unless they can pay the loan. If you are away for more than 12 consecutive months in a healthcare facility and no co-borrower lives in the home, the CFPB states the same result, unless someone in the home can pay the loan or qualifies as an eligible non-borrowing spouse.
A homeowner who still has a mortgage or federal debt and cannot pay it off at closing. That is a CFPB eligibility condition, not a preference.
Someone who needs the loan balance to go down through monthly mortgage payments. The CFPB says the reverse-mortgage balance goes up because interest and fees are added each month.

Before a reverse mortgage, the CFPB says to look at other ways to use the home and the budget, including waiting, a home equity loan or line of credit, refinancing, downsizing, and lowering expenses. It says a home equity loan or line of credit "might be a cheaper way to borrow cash against your equity," and that those loans usually have monthly payments and depend on income and credit.

HECM, HELOC, home equity loan, and home equity investment

Each cell is a fact from a page listed in Sources. If that page does not state the fact, the cell says so. A home equity investment on this site means the same contract the CFPB calls a home equity contract: cash upfront in exchange for a later payment based in part on the home's value. Provider formulas are not identical. Read what a home equity agreement contains and HEI vs HELOC for the contract side of that comparison.

Facts from CFPB, HUD, and FTC only. Individual contracts control.
Question	Reverse mortgage (HECM)	HELOC	Home equity loan	Home equity investment (HEI)
Who qualifies, by age	Homeowners who are 62 or older. The CFPB and the FTC both state that age for a HECM, the most common reverse mortgage.	The FTC comparison table lists no age requirement. It says you cannot legally commit to a mortgage until you are 18, unless you have a co-signer.	The FTC states the same age note as for a HELOC: no age requirement, and you cannot legally commit to a mortgage until you are 18 unless you have a co-signer.	The CFPB home equity contracts overview does not state a minimum age of 62. It describes the contract for existing homeowners.
Monthly payments	No monthly mortgage payment. The CFPB still requires property taxes, homeowners insurance, principal-residence use, and keeping the house in good condition.	Usually yes. The CFPB says a home equity loan or line of credit usually has monthly payments. A HELOC payment varies with the outstanding balance.	Usually yes. The CFPB says these loans usually have monthly payments. If you already have a mortgage, the home equity loan is a second mortgage you pay in addition to the first.	Not a series of monthly loan payments. The CFPB says repayment is one lump sum later. The homeowner still pays property taxes, insurance, and other debt secured by the home. This site describes that contract as generally having no scheduled monthly loan payment.
How it is repaid	When the borrower no longer lives in the home, usually by selling the home. Interest and fees are added each month, so the balance rises.	You pay the line. The CFPB says the payment varies with the balance. The cited HELOC page does not say repayment waits until you leave the home.	You repay the amount borrowed. The CFPB describes a lump sum borrowed against the home's equity, paid in addition to a first mortgage if you have one.	One lump sum based in part on the home's value, due by the end of the term or when a trigger such as a sale occurs. The CFPB says the amount can be difficult to predict.
Sale, move, or death	The CFPB says the loan is repaid when the borrower no longer lives in the home. The FTC says it generally must be paid back when you die or move. It becomes due after the borrower's death and after the death of any coborrowers or an eligible nonborrowing spouse. A long absence can also make it due, as the CFPB absence rules above describe. HUD says the borrower may stay indefinitely if taxes and insurance stay current.	The CFPB home equity loan and HELOC comparison does not state a sale, move, or death payoff rule. It does say the line is borrowed against the equity of the home.	That same CFPB comparison does not state a sale, move, or death payoff rule. It does say the loan is borrowed against the equity of the home.	The CFPB says a sale can trigger repayment, and that death, default on a senior lien, or failing to pay property taxes or insurance can also trigger it. Some contracts restrict renting or moving. A homeowner who cannot pay the settlement may have to sell or may face foreclosure.

The FTC also says there typically are not income requirements to get a HECM, while lenders still evaluate whether the borrower can pay the loan and keep up the house. The CFPB says qualifying for a home equity loan or HELOC depends on income and credit. A side-by-side of the line and the lump-sum loan is on HELOC vs home equity loan.

Questions to ask

The CFPB and the FTC both point readers to a HUD-approved counselor before a HECM. These questions follow what those pages say to clarify. They are not a quote from a lender.

Am I 62 or older, and is this home my principal residence?
Can an existing mortgage and any federal debt be paid off at closing?
How will property taxes, insurance, and repairs be paid, and will any loan funds be set aside for those charges?
Can a spouse stay after my death, and is that person a coborrower or an eligible nonborrowing spouse?
What happens if I sell, if I move, or if I am away for more than six months, or for more than 12 consecutive months in a healthcare facility?
If the balance is larger than the home's value, what does HECM mortgage insurance cover when the home is sold?
How does the written offer compare with a home equity loan, a HELOC, a refinance, or selling the home?
Have I already met with a counselor from a HUD-approved reverse mortgage counseling agency?

Who publishes this page

Equity Edge Lending Inc. is a mortgage brokerage. Company NMLS #2808857 can be checked on NMLS Consumer Access. California DRE #02423720 can be checked on the Department of Real Estate license record. This page does not offer a reverse mortgage or a HECM, and it does not describe Equity Edge Lending as a HUD-approved HECM lender. HUD says the HECM is the only reverse mortgage insured by the U.S. federal government, and that it is only available through an FHA-approved lender. That is a HUD statement about the program, not a statement about this company.

The home equity options described elsewhere on this site are a HELOC, a home equity loan, and a home equity investment, also called a home equity agreement or home equity contract. Availability and final terms depend on the provider, the property, and underwriting. This page is general education. It is not a commitment to lend and not a statement that any homeowner will be approved.

Frequently asked

Common questions

What is a reverse mortgage?+

A Home Equity Conversion Mortgage (HECM), the most common type of reverse mortgage, is a home loan only for homeowners who are 62 and older. The home secures the loan, the title stays in the borrower's name, and borrowers do not make monthly mortgage payments. The loan is repaid when the borrower no longer lives in the home. Interest and fees are added to the balance each month, and the balance grows. The Consumer Financial Protection Bureau states these points for HECMs.

Do HECM borrowers make a monthly mortgage payment?+

No. The CFPB says borrowers do not make monthly mortgage payments. They must still pay property taxes and homeowners insurance, use the home as their principal residence, and keep the house in good condition. HUD says HECM borrowers may reside in the home indefinitely as long as property taxes and homeowner's insurance are kept current.

Who can get a HECM, and is counseling required?+

The CFPB says a HECM is available only to homeowners who are 62 and older. The home must be the principal residence. The borrower must own the home outright or be able to pay off the existing mortgage at closing, must not owe federal debt unless that debt is paid off, must be able to cover property charges, and the home must meet property standards. The CFPB says the borrower must receive counseling from a HUD-approved reverse mortgage counseling agency. The FTC says a HECM applicant must meet with a counselor from an independent government-approved housing counseling agency first.

What happens to a HECM if I sell, move, or die?+

The CFPB says the loan is repaid when the borrower no longer lives in the home, usually by selling the home. The FTC says a reverse mortgage generally must be paid back when you die or move. The CFPB says the loan becomes due and payable after your death and after the death of any coborrowers or an eligible nonborrowing spouse. If you are away for more than six months for a non-medical reason and no co-borrower lives in the home, the CFPB says the loan must be paid back or satisfied by selling the property or a deed in lieu of foreclosure, and anyone living there must move unless they can pay the loan. If you are away for more than 12 consecutive months in a healthcare facility and no co-borrower lives in the home, the CFPB states the same result unless someone in the home can pay the loan or qualifies as an eligible non-borrowing spouse. If the HECM balance is larger than the home's value, the CFPB says you or your heirs may not have to pay the difference, and mortgage insurance pays the remaining balance if the home is sold for the appraised fair market value.

How does a HECM differ from a HELOC, a home equity loan, and a home equity investment?+

The FTC says a HECM borrower must be 62 or older. Its comparison table lists no age requirement for a home equity loan or a HELOC, other than the rule that you cannot legally commit to a mortgage until you are 18 unless you have a co-signer. The CFPB says a home equity loan or HELOC usually has monthly payments and that qualifying depends on income and credit. A HECM does not use a monthly mortgage payment, and the balance grows. A home equity investment, which the CFPB calls a home equity contract, is different: the homeowner receives an upfront payment and repays one lump sum later that is based in part on the home's value, at the end of the term or when a trigger such as a sale occurs. On this site, that contract generally does not require a scheduled monthly loan payment.

Does Equity Edge Lending offer a reverse mortgage?+

No. This page is general education about reverse mortgage pros and cons. Equity Edge Lending does not offer a reverse mortgage or a HECM here, and this page does not describe the company as a HUD-approved HECM lender. Home equity options described elsewhere on this site depend on the provider, the property, and underwriting.

Sources and further reading

This page is general education, not legal, tax, or financial advice, and it is not a commitment to lend. Program availability, terms, and underwriting vary by lender and by situation. Review any agreement with qualified legal, tax, and financial professionals before signing.

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