The basics
A Home Equity Conversion Mortgage (HECM) is a reverse mortgage insured by the Federal Housing Administration. It's designed for homeowners 62 and older who want to convert part of their home equity into usable funds without giving up their home or taking on a monthly mortgage payment.
You keep the title
Contrary to one of the most persistent myths, the bank does not take title to your home. You remain the owner, the same way you would with any other mortgage.
You don't make required monthly payments
Because interest accrues onto the loan balance instead of being paid monthly, you don't have a required principal and interest payment. You are still responsible for property taxes, homeowners insurance, HOA dues if applicable, and reasonable maintenance.
Who qualifies
- At least one borrower is 62 or older
- The home is your primary residence
- You have significant equity (typically 50% or more)
- The home meets FHA property standards
- You complete a required session with an independent HUD-approved counselor
How you receive the money
You choose how you want to receive HECM proceeds, and the choice matters. The three most common options are:
- Line of credit. Available funds you can draw on anytime. The unused balance grows over time at the loan's rate, a powerful and often overlooked feature.
- Monthly tenure or term payments. A fixed monthly deposit for a set period or for as long as you live in the home.
- Lump sum. A single disbursement at closing. Typically used to pay off an existing mortgage or fund a specific need.
The FHA safeguards
Because HECMs are FHA-insured, they come with several borrower protections that don't exist on any other mortgage product:
- Non-recourse. Neither you nor your heirs will ever owe more than the home is worth at repayment.
- Required counseling. An independent counselor must confirm you understand the loan before you can proceed.
- Non-borrowing spouse protections. A qualifying spouse under 62 can remain in the home under specific rules.
- Growing line of credit. Available (unused) credit grows over time.
How the loan is eventually repaid
Repayment is triggered when the last borrower sells the home, moves out for more than 12 months (typically for long-term care), or passes away. Heirs have up to a year to decide whether to sell, refinance, or walk away, with no personal liability.
How Brian walks you through it
Brian starts every reverse mortgage conversation the same way: not with a rate sheet, but with a whiteboard. Together you'll map out your income, your home equity, your goals, and any concerns your family has. If a HECM isn't the right answer, he'll say so.