Reverse Mortgage Age Requirements

What the Age Rule Means for a Couple When One Spouse Is Younger

A younger spouse is the most common reason a couple's plans get complicated. A spouse who is under 62 at closing cannot be a HECM borrower. That spouse may instead be named in the loan papers as a non-borrowing spouse. A non-borrowing spouse is a husband or wife who lives in the home but is not a borrower on the loan. HUD's lender guide states that a non-borrowing spouse must be 18 or older.

The protection that matters is called the deferral period. A deferral period is a stretch of time during which the loan does not have to be repaid even though the last borrower has died. Under 24 C.F.R. § 206.27(c), HUD requires the mortgage to defer due-and-payable status for an Eligible Non-Borrowing Spouse until that spouse dies, or until the deferral requirements stop being met and are not cured. So the loan does not come due only because the borrowing spouse died, as long as the spouse keeps meeting those requirements.

For HECMs with FHA case numbers assigned on or after August 4, 2014, the Consumer Financial Protection Bureau lists conditions that include: being married to the borrower when the loan papers were signed and staying married until the borrower's death; being named in the loan papers as a non-borrowing spouse; and living in the home at closing and continuing to live there as a principal residence. HUD's list continues beyond these.

There is a real tradeoff. The CFPB states that an Eligible Non-Borrowing Spouse "will not get any money from the reverse mortgage." The spouse may stay, but cannot draw on the loan. The CFPB also notes that qualifying may be difficult and that an attorney or a HUD-approved housing counseling agency can help.

Some couples ask about taking the younger spouse off the title so the older spouse can borrow alone. That is a serious decision about ownership, with legal and financial consequences. An attorney can explain what it would mean for both spouses.

How Your Age Affects How Much You May Be Able to Receive

Once age is settled, the next question is usually how much. The answer depends on more than age. The principal limit is the total amount a borrower may be eligible to draw from a HECM, before fees and charges are taken out. The statute itself describes payments "based on accumulated equity (minus any applicable fees and charges)."

HUD states that the amount available "varies by borrower" and depends on the age of the youngest borrower or eligible non-borrowing spouse, the current interest rate, and the lesser of the appraised value, the HECM FHA mortgage limit, or the sales price. That mortgage limit is often called the maximum claim amount. HUD publishes the current figure, and it can change.

In plain terms, the program's formula is built around age. Under it, an older youngest borrower generally may be able to reach a larger share of the home's value than a younger one, with everything else the same. This is also why a younger spouse matters even when that spouse is not a borrower. HUD counts the age of an eligible non-borrowing spouse in the calculation.

Whatever amount is drawn, it is a loan. The CFPB explains that "Interest and fees are added to the loan balance each month and the balance grows." As the balance grows, the owner's equity shrinks.

A HUD-approved housing counselor can walk through an illustration built on a household's own ages and home. That illustration shows how the numbers work. It is not a promise of any amount; a lender decides that, subject to its approval and the loan's terms.

Proprietary Reverse Mortgages and Their Age Rules

Not every reverse mortgage follows the HECM age rule. A proprietary reverse mortgage is a private reverse mortgage, sometimes called a jumbo reverse mortgage, that a private lender offers without FHA insurance. Because it is not FHA-insured, it is not a HECM. The HECM statute and HUD's HECM rules described on this page do not govern it.

That changes several things at once. Each lender sets its own minimum age, and some set it below 62. Its terms, fees, payment choices and protections come from the lender's own loan papers. These loans are sometimes discussed for owners of higher-value homes or for owners younger than 62.

Two HECM protections deserve a careful look. The non-borrowing spouse deferral period described above is a HUD rule for HECMs. A private loan may or may not include something similar; the loan papers say. Counseling also differs. HECM counseling is required by law, while the Federal Trade Commission notes that "Some lenders offering proprietary reverse mortgages also require counseling." State law may also play a part.

The core facts of a reverse mortgage still hold. The balance grows as interest and charges are added, and the loan comes due under the events the papers list. A lender discloses the age rule, costs and terms for any private loan before closing, and an attorney or counselor can help read them.

Other Eligibility Requirements That Work Alongside the Age Rule

Turning 62 opens the door, but it is only one requirement. The CFPB lists others, including these.

Principal residence. A principal residence is the home where the borrower lives most of the year. Under 24 C.F.R. § 206.39, the property "must be the principal residence of each borrower, and if applicable, Eligible Non-Borrowing Spouse, at closing."

Eligible property. HUD's lender guide lists allowed property features that include a 1-4 unit home with one unit occupied by the borrower. The statute also covers some cooperative and long-lease homes. The home must meet FHA property standards, and the lender says what repairs are needed.

Enough equity. The home does not have to be paid off. The CFPB states that any existing mortgage must be paid off at closing, using the borrower's own funds or money from the reverse mortgage. That is a common path for retiring with a mortgage still owed.

No federal debt. A borrower cannot owe federal debt, such as federal income taxes or federal student loans, though loan money may be used to pay it off.

Money for ongoing charges. The CFPB states a borrower must have enough money, or agree to set aside part of the loan at closing, for property taxes, insurance, maintenance and repairs. The lender reviews this.

Counseling. Under 24 C.F.R. § 206.41, the borrower, any non-borrowing spouse and any non-borrowing owner must receive counseling. HUD's HECM Counselor Roster lists approved counselors; HUD's number is (800) 569-4287.

After closing, the duties continue. The borrower must live in the home, pay property taxes and homeowners insurance, and keep the home in good condition. Under 24 C.F.R. § 206.27(c), the loan becomes due when a borrower dies and no surviving borrower lives there (subject to the spouse deferral), or when a borrower conveys all title and no borrower keeps title. With HUD's approval, it also becomes due if the home stops being a borrower's principal residence for reasons other than death; if a borrower is away for longer than 12 consecutive months because of physical or mental illness; if property charges are not paid; or if another loan obligation is not performed, in each case when no other borrower lives there as indicated.

When a Reverse Mortgage May Not Fit Your Situation

Meeting the age rule answers whether a loan is possible, not whether it fits. A reverse mortgage is one option among several, and a few situations call for a slower look. For a fuller picture, what a reverse mortgage is and how a reverse mortgage works are good starting points.

A move within a few years. The loan comes due when the borrower moves out. Upfront costs, including an origination fee that federal rules limit and the lender discloses, may outweigh the benefit over a short stay.

Leaving the home to heirs debt-free. Because the balance grows, equity shrinks. The FTC warns this "can use up much – or even all ─ of your equity."

Seeking a monthly income. A reverse mortgage is not income, a grant or a government benefit. The CFPB puts it plainly: it "is not free money." Even monthly payments are loan advances, and the amount owed grows. The home can also be lost to the loan coming due if the duties above are not met.

Other options carry their own tradeoffs:

• A home equity loan or line of credit lets an owner borrow against equity, but usually has monthly payments and depends on income and credit; the reverse mortgage vs HELOC comparison explains the difference.
• A cash-out refinance replaces the current mortgage with a larger one and pays out the difference.
• Selling and downsizing turns equity into cash but means leaving the home.
• Property tax relief programs, which the CFPB says many localities offer through the county or town tax office.
• Assistance programs for utilities, fuel and home repairs, which the CFPB says state and local programs provide.

These options often matter most to owners who are house rich, cash poor. A HUD-approved counselor must discuss alternatives under 12 U.S.C. § 1715z-20(f), and a financial adviser or attorney can help weigh them. This page is general information, not a loan offer or financial, legal or tax advice.