Reverse Mortgage Age Requirements in California

What the HECM Age Rule Actually Means Under Federal Law

In plain terms, the federal rule asks one question at the closing table: is every borrower at least 62 that day? A homeowner who turns 62 next spring is not shut out. They are simply early.

The statute defines an "elderly homeowner" as a homeowner who is, or whose spouse is, at least 62, "or such higher age as the Secretary may prescribe," under 12 U.S.C. § 1715z-20(b)(1). HUD's regulation puts the working rule in one line. 24 C.F.R. § 206.33 reads: "The youngest borrower shall be 62 years of age or older at the time of loan closing." The rule sets a starting age, not an ending one.

A younger spouse may still be part of the picture as a non-borrowing spouse, meaning a spouse who lives in the home but is not on the loan. HUD's HECM Insurance Application guide for FHA-approved lenders lists the non-borrowing spouse as 18 or older. For the protections that may let that spouse stay after the borrower dies, HUD's current rules govern, and HUD publishes them. The FAQ below covers what the CFPB says about those protections.

Counseling is also required. Under 12 U.S.C. § 1715z-20(d), a HECM borrower must have received adequate counseling from an independent third party not associated with or paid by anyone originating or servicing the loan, funding it, or selling annuities, investments, long-term care insurance or other financial or insurance products. The counseling covers options other than a HECM, including other housing, social service, health and financial options. Under 24 C.F.R. § 206.41, the borrower, any non-borrowing spouse and any non-borrowing owner must receive counseling. HUD's page lists a HECM Counselor Roster search and a phone line, (800) 569-4287.

California's Proprietary Reverse Mortgage Programs and the Age-55 Option

A homeowner in their late fifties who sees an ad for a reverse mortgage "starting at 55" is looking at a proprietary loan, not a HECM. That age comes from a lender's terms, not from federal or California statute. The loan's own documents state its minimum age, limits and costs, which differ from a HECM's. Comparing the two in more depth is the subject of HECM vs proprietary reverse mortgages.

California law sets requirements for reverse mortgages made in the state, in Civil Code section 1923.2. They include that prepayment must be allowed without penalty at any time, and that the loan may include costs and fees charged at the start, periodically or at maturity.

California also adds a waiting period. Civil Code section 1923.2(k) says a lender "shall not accept a final and complete application for a reverse mortgage loan from a prospective applicant or assess any fees upon a prospective applicant until the lapse of seven days from the date of counseling." Before that, under section 1923.2(j), the lender provides a list of at least 10 HUD-approved counseling agencies.

On licensing, the California Department of Financial Protection and Innovation explains that anyone in the business of making or servicing residential mortgage loans in California needs a license under the California Residential Mortgage Lending Act, with exemptions including banks, licensed real estate brokers and California finance lenders. The California Department of Real Estate has warned seniors about reverse mortgage scams offering misleading terms or fees.

For either type, the cost of borrowing builds up inside the loan rather than being paid monthly, a point covered further below.

Age Is Just the Start: Other Eligibility Requirements

Passing the age test is the first step, and families are sometimes surprised by what follows. The CFPB lists other HECM requirements. The full set is gathered under reverse mortgage eligibility.

Principal residence. The home must be where the borrower lives. The CFPB describes this as living there the majority of the year, and 24 C.F.R. § 206.39 requires it of each borrower at closing.

The home itself. It must meet FHA property standards and flood requirements. Allowed homes include a 1- to 4-unit home with one unit occupied by the borrower, according to HUD's lender guide. If repairs are needed, the CFPB says the lender will name them. More detail sits under reverse mortgage property requirements.

Equity and existing loans. The borrower must own the home outright or have a low mortgage balance. Any balance must be paid off at closing, with the borrower's own funds or money from the reverse mortgage.

Federal debt. The CFPB says the borrower cannot owe federal debt, such as federal income taxes or federal student loans, though loan money may pay it off.

Other conditions. Federal law lets HUD set additional borrower requirements, under 12 U.S.C. § 1715z-20(d)(2)(D). The lender explains which apply.

Duties after closing. The CFPB says borrowers must pay property taxes and homeowners insurance, use the home as their principal residence, and keep it in good condition. Failing to pay property charges, or to perform another obligation under the mortgage, can make the loan due.

What Happens to the House When the Borrower Moves, Sells, or Dies

This is the question families hold most quietly: what happens to the house later, and to the person still living in it.

The CFPB says reverse mortgages typically must be repaid, usually by selling the home, when the last borrower dies. For a HECM, 24 C.F.R. § 206.27 lists the events that make the loan due, including:

• A borrower's death, when the home is not the principal residence of a surviving borrower, with a deferral for an eligible non-borrowing spouse.
• A transfer of title, when no other borrower keeps title.
• Moving out, when the home stops being a borrower's principal residence for reasons other than death and no other borrower lives there.
• Illness, when a borrower is away for longer than 12 consecutive months because of physical or mental illness and no other borrower lives there.
• Unpaid property charges or another unmet obligation.

For a California reverse mortgage, Civil Code section 1923.2(g) adds that absences of up to 60 consecutive days do not make the loan due.

When the loan comes due, heirs may pay it off and keep the home, or the home is sold. California's required counseling worksheet warns that if heirs cannot pay it off, the home will pass into foreclosure.

There is a limit on what is owed. A HECM must provide that the homeowner is not liable for any shortfall between the balance and what the lender recovers from the net sale proceeds or insurance, under 12 U.S.C. § 1715z-20(d)(7). The FTC describes this "non-recourse" feature as meaning the borrower or estate cannot owe more than the home's value when the loan is due and the home is sold. A proprietary loan's documents state its own terms.

Meanwhile, interest and fees are added to the balance, so the amount owed grows over time. The FTC notes this can use up much, or even all, of the equity.

Reverse Mortgages as One Option Among Several

The real question behind an age search is usually larger: how to cover costs in retirement while staying in the home. Federally required HECM counseling covers other options for exactly that reason. Here are the main ones, each as it would look on first meeting.

• A budget and benefits review. Looking at expenses and programs that may help. The CFPB points to state and local help with utilities, fuel and home repairs, and to benefitscheckup.org. It trades time and paperwork for no new debt.
• Property tax relief. The CFPB notes many localities have property tax programs, through the county or town tax office. California also has a property tax postponement program for some homeowners. Relief programs carry their own eligibility rules.
• Help from family. Relatives may contribute or share costs. It keeps the home free of new debt but depends on family means and agreement.
• Selling or downsizing. Moving to a less costly home frees equity and lowers upkeep, at the price of leaving the current home.
• A home equity loan or line of credit. A loan, or a line drawn as needed, secured by the home. It brings monthly payments.
• A cash-out refinance. A new, larger mortgage replacing the old one. It also brings monthly payments.
• A reverse mortgage. Borrowing against the home with no monthly mortgage payment, while the balance rises as described above. The borrower must live in the home as a principal residence, pay property taxes and homeowners insurance, and keep it up. The loan comes due when the last borrower dies, sells or moves out. It is a loan, not income, a grant or a government benefit.

A wider overview appears in the California reverse mortgage guide. For a picture built on one household's facts, a HUD-approved counselor is the independent next step.