HECM Requirements

The Age Rule and Who Can Borrow

Age is the first question a family usually asks, and the rule is short. Under 24 C.F.R. § 206.33, "The youngest borrower shall be 62 years of age or older at the time of loan closing." The age that counts is the age on the closing date, not the date someone first asks about the loan.

"Youngest borrower" matters when two people borrow together. In a hypothetical illustration, if a husband is 70 and his wife is 63 and both are borrowers, the wife's age is the one measured against the rule. If one spouse is under 62, that spouse cannot be a borrower, though spouses who do not borrow have their own rules, described below.

The age rule ties back to the purpose Congress wrote into the program. Under 12 U.S.C. § 1715z-20(a), the program is meant "to meet the special needs of elderly homeowners" facing rising costs for "health, housing, and subsistence needs at a time of reduced income." The statute's definitions, at 12 U.S.C. § 1715z-20(b), describe an "elderly homeowner" as one "who is, or whose spouse is, at least 62 years of age or such higher age as the Secretary may prescribe." More on how the age rule works for couples is in reverse mortgage age requirements.

Title and Ownership

Whose name is on the deed is the next thing to check, because HUD's title rules decide who can borrow. Title simply means legal ownership of the property, usually shown on the recorded deed.

Under 24 C.F.R. § 206.35, a mortgagor (a person who pledges the property as security) does not have to be a borrower, but every borrower must be on title. The mortgagor must hold title to the entire property, and where there are several mortgagors, together they must hold title to the entire property. If a mortgagor holds a life estate (the right to use a home for life, after which it passes to someone else), the term "mortgagor" for this rule includes each holder of the future interest who has signed the mortgage.

Non-borrowing spouses and non-borrowing owners who will stay on title must sign the mortgage as mortgagors, committing the property as security. Under the same section, every non-borrowing spouse and non-borrowing owner also signs a certification that consents to the spouse or other owner obtaining the HECM, acknowledges the mortgage's terms and conditions, and acknowledges that the property will serve as collateral through the mortgage lien. In plain terms, the lender needs everyone with an ownership stake to commit the whole property, so no part of it sits outside the loan.

The Home and the Property

The house itself has to qualify, and several separate rules apply to it.

Principal residence. Under 24 C.F.R. § 206.39(a), the property must be the principal residence of each borrower and, if applicable, any Eligible Non-Borrowing Spouse, at closing. The CFPB describes a principal residence as where you live the majority of the year.

Form of ownership and title insurance. Under 24 C.F.R. § 206.45(a), the mortgage must be on real estate held in fee simple (full ownership with no time limit), or on a leasehold under a lease lasting until the later of 99 years, if the lease is renewable, or the borrower's actuarial life expectancy plus a number of years HUD specifies, not more than 99. The lender must obtain title insurance satisfactory to HUD, unless HUD finds such insurance unavailable at reasonable rates in a state and specifies other title evidence instead.

Type of property. Under 24 C.F.R. § 206.45(b), the property must include a dwelling designed principally as a residence for one family or for such additional families as HUD determines, and a condominium unit designed for one-family occupancy is also eligible. The statute, at 12 U.S.C. § 1715z-20(d)(3), describes a dwelling designed principally for a 1- to 4-family residence in which the borrower occupies one of the units.

Condominiums. Under 24 C.F.R. § 206.51, if the home is a condominium unit, the project in which it sits must be acceptable to HUD.

Condition and repairs. Under 24 C.F.R. § 206.47(a), properties must meet HUD's applicable property requirements to be eligible, and a property that does not meet them must be repaired so the repaired home will serve as adequate security for the loan. That means a home that does not meet those requirements may need repairs before it can serve as security for the loan. Detail on condition and repair rules is in reverse mortgage property requirements.

What Happens to an Existing Mortgage at Closing

A mortgage still owed in retirement does not by itself rule out a HECM, but it has to be dealt with. The CFPB says that if there is a mortgage balance, it must be paid off at closing, with the homeowner's own funds or money from the reverse mortgage. The CFPB also says a borrower cannot owe federal debt, such as federal income taxes or federal student loans, though reverse mortgage money may be used to pay it off.

HUD's regulation adds a related rule. Under 24 C.F.R. § 206.32, a borrower must show the lender that after the first payment of loan proceeds there will be no outstanding or unpaid obligations from the loan transaction, except mortgage servicing charges HUD permits and any future Repair Set Aside (money held back in the loan for required repairs), and that the first disbursement will not pay an estate planning service firm.

There is also a limit of one HECM at a time. Under 24 C.F.R. § 206.34(a), a borrower who already has a HECM may obtain a new one only if the existing HECM is paid off before or at the new closing, or the borrower provides legal documentation acceptable to HUD showing release from the obligation on the existing loan. Under 24 C.F.R. § 206.34(b), a current HECM borrower selling the home to buy a new one through a HECM for Purchase must pay off the existing FHA-insured mortgage before the new loan can be insured.

Counseling Before You Apply

Counseling is the step that exists to protect the homeowner, and it comes before the loan. Federal law requires it. Under 12 U.S.C. § 1715z-20(d)(2)(B), to be eligible for insurance a HECM must have been signed by a borrower who has received adequate counseling from an independent third party not associated with or paid by anyone involved in originating or servicing the mortgage, funding the loan, or selling annuities, investments, long-term care insurance or other financial or insurance products. That requirement applies generally; the statute allows a borrower refinancing an existing HECM to waive it only under specific conditions.

Under 24 C.F.R. § 206.41(a), at the first contact the lender must give the prospective borrower a list of HUD-approved HECM counselors and their agencies, with names, addresses and telephone numbers. The same section says the borrower, any Eligible or Ineligible Non-Borrowing Spouse, and any non-borrowing owner must receive counseling. So a spouse who will not borrow still takes part.

Under 12 U.S.C. § 1715z-20(f), the counselor discusses topics including options other than a HECM, other home equity conversion options, the financial implications of the loan, and a disclosure that a HECM may have tax consequences, affect eligibility for federal and state assistance, and affect the estate and heirs. HUD's HECM page says a reverse mortgage counselor can be found through the HECM Counselor Roster or by calling (800) 569-4287. The CFPB adds that a person can talk with a counselor while still only considering a reverse mortgage.

The Financial Assessment

A family worried about an old late payment or a small pension often wonders whether credit will end the conversation. The rule works differently from a single score cutoff.

Under 24 C.F.R. § 206.37(a), each borrower must have a general credit standing satisfactory to HUD. Under 24 C.F.R. § 206.37(b), before approving the loan the lender must assess the borrower's financial capacity to comply with the mortgage's terms and evaluate whether the HECM is a sustainable solution for that borrower. The assessment considers credit history, cash flow and residual income (what remains after documented obligations are paid from documented income), extenuating circumstances, and compensating factors.

Two of those terms deserve a plain explanation. Extenuating circumstances are the events that led to credit problems; where a borrower's credit history does not meet the lender's criteria, the lender must consider and document them. Compensating factors are strengths the lender considers alongside weaknesses, and the lender must document any it considered.

The assessment is completed and approved by a HUD-registered underwriter at the lender. The regulation also requires that it be conducted uniformly, without discrimination on grounds including race, color, religion, sex, national origin, familial status, disability, marital status, source of income and location of the property. The result is the lender's decision, made under these rules.

Requirements That Continue After Closing

Closing is not the end of the rules, and for a homeowner hoping to stay put, this section matters most. A HECM lets a borrower draw on equity without monthly mortgage payments, but the CFPB explains that interest and fees are added to the loan balance each month, so the balance grows over time. The CFPB also says borrowers must pay property taxes and homeowners insurance, use the property as their principal residence, and keep the house in good condition.

Property charges. Under 24 C.F.R. § 206.205(a), the borrower must pay ground rents, condominium fees, planned unit development fees and homeowners' association fees on or before the due date. Property taxes, including special assessments, hazard insurance and any flood insurance premiums are also the borrower's obligation, paid by the borrower, through a set-aside account in the loan, or by the lender, under the rules of that section.

Yearly occupancy certification. Under 24 C.F.R. § 206.211(a), at least once each calendar year the lender verifies contact information and whether the home is still the principal residence of at least one borrower. Each borrower certifies contact information and residence, and may name an alternate person to receive copies of notices.

When the loan comes due. The CFPB says a HECM must be paid off when the last surviving borrower or Eligible Non-Borrowing Spouse dies, sells the home, or no longer lives there as a principal residence. Under 24 C.F.R. § 206.27(c)(1), the balance is due when a borrower dies and the home is not the principal residence of at least one surviving borrower, subject to a Deferral Period for an Eligible Non-Borrowing Spouse who meets its requirements, or when a borrower conveys all title and no other borrower keeps title. Under 24 C.F.R. § 206.27(c)(2), with HUD's approval, the balance is also due if the home stops being a borrower's principal residence for reasons other than death and no other borrower lives there; if a borrower is away longer than 12 consecutive months because of physical or mental illness and no other borrower lives there; if property charges are not paid as § 206.205 requires; or if another obligation under the mortgage, such as keeping the home in good repair, is not performed. What follows a default, step by step, is set out in reverse mortgage foreclosure and default rules.

Where the Rules Come From

Most of the requirements on this page come from one statute and one set of regulations. Congress authorized the program in 12 U.S.C. § 1715z-20, part of the National Housing Act. HUD's rules carrying it out are in 24 C.F.R. Part 206. HUD also issues Mortgagee Letters, notices to lenders, that set figures and update requirements.

HUD publishes the HECM limit, called the maximum claim amount. Under Mortgagee Letter 2025-22, for the period of January 1, 2026, through December 31, 2026, the HECM maximum claim amount is $1,249,125. That is a ceiling on the value the loan can be based on, not an amount any borrower receives.

HUD also sets the mortgage insurance premium. Under Mortgagee Letter 2017-12, for HECMs with case numbers assigned on or after October 2, 2017, the initial premium is 2.00% of the maximum claim amount and the annual premium is 0.50% of the outstanding mortgage balance. HUD publishes any later change. Federal rules also limit the origination fee a lender may charge, and the lender discloses it; the statute requires full disclosure of all costs charged to the borrower.