Main menu:
Make this your Homepage - Bookmark This Page
FHA Reverse Mortgage
The program allows homeowners to borrow against the equity in their homes. Homeowners 62 and older which have paid off their mortgages or have a small mortgage balance remaining, also are currently living in the home are eligible to participate in FHA's reverse mortgage program.
Unlike ordinary home equity loans, an FHA reverse mortgage does not require repayment as long as the home is the borrower's principal residence. Lenders recover their principal, plus interest, when the home is sold. If any home equity remains after sale, the remaining value of the home goes to the homeowner, estate or heirs. You can never owe more than your home's value.
If the sales proceeds are insufficient to pay the amount owed, HUD will pay the lender the amount of the shortfall. HUD's Federal Housing Administration (FHA) collects an insurance premium from all borrowers to provide this coverage.
The amount a homeowner can borrow depends on their age, the current interest rate, other loan fees and the appraised value of the home or the FHA's mortgage limits for the area, whichever is less. Generally, the more valuable your home is, the older you are, and the lower the interest, the more you can borrow.
For example, based on a loan with interest rates of approximately 9%, and a home qualifying for $100,000, a 65-year-old could borrow up to 22% of the home's value; a 75-year-old could borrow up to 41% of the home's value; and, an 85-year-old could borrow up to 58% of the home's value. The percentages do not include closing costs because these charges vary.
You can consult your mortgage lender for more information.