Credible
Get Rates
  • Refinance Student Loans
    • Compare Options
      • Best Refinancing Companies
      • Lender Reviews
      • Refinance Student Loans
      • Student Loan Consolidation
    • Learn the Basics
      • Fixed vs. Variable Rates
      • Forgiveness Programs
      • Consolidation vs Refinancing
      • Repayment Plans
      • More on Student Refi
    • How to
      • Consolidate Your Student Loans
      • Pay Off Your Student Loans
      • Lower Your Interest Rate
    • Tools
      • Current Student Loan Refi Rates
      • Refinancing Calculator
      • Repayment Calculator
      • Student Loan Score Calculator
  • Student Loans
    • Compare Options
      • Private Student Loans
      • Parent Student Loans
      • Law School Loans
      • Medical School Loans
      • Graduate Student Loans
    • Learn the Basics
      • Student Loan Limits
      • Living Expenses
      • Applying for FAFSA
      • Federal Student Loans
      • Student Loan Interest Rates
      • More on Student Loans
    • How To
      • Pay for College
      • Take Out Student Loans
      • Apply Without Cosigner
      • Apply for Student Loans
      • Pay for Grad School
    • Tools
      • Best Private Student Loans
      • Current Student Loan Rates
      • Student Loan Interest Calculator: Estimate Payments
      • Lender Reviews
  • Personal Loans
    • Compare Options
      • Best Personal Loan Lenders
      • Lender Reviews
      • Get Personal Loan Rates
    • Learn the Basics
      • How to Qualify
      • How to Get a Loan
      • Where to Get a Loan
      • Personal Loans with Cosigner
      • Pay Off Credit Card Debt
      • More on Personal Loans
    • Best for
      • Credit Card Consolidation
      • Debt Consolidation Loans
      • Home Improvement Loans
      • Good Credit
      • Fair Credit
      • Bad Credit
    • Tools
      • Current Personal Loan Rates
      • Personal Loan Calculator
  • Mortgages
    • Compare Options
      • Mortgage Refinance
      • Home Loan
      • Best Mortgage Refinance Companies
      • Best Mortgage Lenders
      • Mortgage Preapproval
      • Mortgage Payment Calculator
    • Compare Rates
      • Mortgage Refinance Rates
      • 30-Year Fixed Refinance Rates
      • 15-Year Fixed Refinance Rates
      • Home Loan Rates
      • 15-Year Fixed Mortgage Rates
      • 30-Year Fixed Mortgage Rates
    • Learn the Basics
      • How to Buy a House
      • How to Refinance Your Mortgage
      • How to Get the Best Rate
      • Cash-Out Refinancing
      • More on Home Loans and Refi
    • Pay Off Mortgage
      • Home Equity to Pay Off Debt
      • Paying Off Mortgage Early
      • Mortgage Refinance Cost
  • Insurance
    • Insurance Products
      • Insurance Products
      • Learn more about home insurance
    • Compare Options
      • Compare Insurance Quotes
      • Home Insurance Guide
    • Learn the Basics
      • What Home Insurance Covers
      • How Much Home Insurance You Need
      • Estimate Your Home Replacement Cost
      • How to Change Home Insurance
  • Company
    • About
    • Reviews
    • Blog
    • Lenders
    • Editorial Guidelines
    • FAQs
    • Press
  • Find My Rate
Advertiser Disclosure

How to Pay Back a Reverse Mortgage

In most cases, you or your heirs will need to sell the home to repay a reverse mortgage, but that doesn’t need to happen until you’ve died or moved out.

Andrew Dunn Andrew Dunn Edited by Chris Jennings Updated April 25, 2022

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as "Credible."

Retirement is a well-deserved break after a lifetime of work, but it can also stretch your finances. You might need between 70% to 90% of your former income to live comfortably in retirement — but that’s not always possible.

If you’re struggling to figure out how to make ends meet after retiring, you might consider a reverse mortgage. This is a special type of loan designed for seniors that can give you a much-needed financial cushion.

Here’s how a reverse mortgage works and how it’s ultimately paid back:

  • How does a reverse mortgage work?
  • How do you pay back a reverse mortgage?
  • When do you have to pay back a reverse mortgage?
  • Types of reverse mortgages
  • How to qualify for a reverse mortgage

How does a reverse mortgage work?

With a traditional mortgage, you borrow a sum of money to buy a home and then pay back the loan with monthly mortgage payments — a reverse mortgage is the opposite.

Typically, you take out a reverse mortgage on a home you own. Then, the reverse mortgage lender pays you — either with monthly payments, a lump sum, or through a line of credit.

The amount you receive is based on your age, the interest rate you qualify for, and the worth of your home. That’s because a reverse mortgage borrows against the equity in your property, or the difference between what it’s worth and any remaining mortgage you owe.

How do you pay back a reverse mortgage?

Typically, a reverse mortgage doesn’t need to be paid back until you move out of the home or pass away. At that point, you or your heirs will pay back the amount borrowed as well as interest and fees accumulated over time. These can include closing costs, origination fees, mortgage insurance premiums and servicing fees.

Unlike a traditional mortgage, you don’t make small monthly payments to repay a reverse mortgage. Instead, repayment needs to be made all at once. Here are a few of the more common ways a reverse mortgage is paid back.

Selling

The most common way a reverse mortgage is paid back is through selling the home. When the home is sold, you use the proceeds from the sale to pay back the loan.

Here are the scenarios you’ll encounter, depending on the value of your home at the time of the sale:

  • If the value of the home is greater than the loan balance: You or your heirs keep the difference.
  • If the value of the home is less than the loan balance: You or your heirs will use the sale proceeds to pay back part of the loan and mortgage insurance will pay the difference. You’ll never have to pay back more than 95% of the appraised value of the home.

Refinancing

You may be able to avoid selling your home by refinancing your reverse mortgage. If you have enough equity in the home and enough income to make mortgage payments, you may qualify to refinance back into a traditional mortgage. This is a good option to consider if you or your heirs wish to keep the home.

Tip: You can also choose to refinance into a new reverse mortgage, which may be beneficial if interest rates have fallen or if the value of your home has increased significantly.

Learn More: Mortgage Refinancing: Resources & Lender Reviews

Deed in lieu of foreclosure

If you’re not able to sell or refinance the home, you may be able to satisfy the reverse mortgage through a process known as “deed in lieu of foreclosure.” This involves turning over ownership of the home to the lender, avoiding foreclosure proceedings.

You may consider this option if your home’s value has dropped significantly and is now far less than the reverse mortgage loan balance.

Paying off the loan with cash

If you or your heirs have enough savings, you may be able to pay off the reverse mortgage loan balance with cash. The most you’ll need to pay is 95% of the home’s value. A reverse mortgage can typically be paid back at any time.

When do you have to pay back a reverse mortgage?

Generally, reverse mortgage borrowers don’t need to pay back the reverse mortgage as long as they live in the home. Payment typically comes due whenever the homeowner:

  • Passes away
  • Sells their home
  • Leaves the home to live somewhere else (such as an assisted living facility)

If you borrowed the reverse mortgage along with your spouse, they will be able to stay in the home without repaying the reverse mortgage if you pass away or move out. Your spouse may be able to stay in the home even without being a co-borrower if you were married at the time of the reverse mortgage, qualifying as an eligible non-borrowing spouse.

There are a few other situations in which a borrower may need to pay back a reverse mortgage or otherwise risk losing the home. For example, you may default on your reverse mortgage if you fail to pay your property taxes or homeowner’s insurance or if you don’t keep up with home repairs. But your mortgage servicer will make sure you are aware of the terms of your loan.

Whether you’re researching rates, trying to refinance your mortgage, or looking to buy a home, Credible is here to help. You can compare prequalified mortgage rates from our partner lenders in just a few minutes.

Loading widget - refi-rate-table

Types of reverse mortgages

There are three types of reverse mortgages:

  1. Home Equity Conversion Mortgage (HECM)
  2. Proprietary reverse mortgage
  3. Single-purpose reverse mortgage

The most common type of reverse mortgage is the Home Equity Conversion Mortgage, or HECM. These loans are insured by the Federal Housing Administration (FHA) and can be used for any purpose.

You may also find proprietary reverse mortgages offered by private lenders, which are most common for people with very high home values.

Finally, there are single-purpose reverse mortgages. These reverse mortgages are sponsored by state or local governments, or nonprofits. They can only be used for a specific purpose like home repair or paying property taxes.

Learn More: Types of Reverse Mortgages

How to qualify for a reverse mortgage

To qualify for a reverse mortgage, you usually must meet strict criteria. In most cases, eligibility includes:

  • You must be age 62 or older
  • You must live in the home full-time, as your primary residence
  • You must own your home free and clear, or have only a small remaining mortgage
  • You must be up to date on all federal debt, including income taxes and student loans
  • You must have enough money to keep the home in good repair and pay property taxes and insurance. You may use a portion of the reverse mortgage to keep this promise.

Don’t Miss: Reverse Mortgage Alternatives: 5 Options for Seniors

About the author
Andrew Dunn
Andrew Dunn

Andrew Dunn is an award-winning mortgage and finance writer with a decade of experience covering the industry with articles published at Fox Business, LendingTree, Credit Karma, Axios Charlotte, and more.

Read More

Home » All » Mortgage Refinance » How to Pay Back a Reverse Mortgage

Home Refinance Options


  • Choose the Right Refi Option
  • Rate and Term Refinance
  • Cash-Out Refinance
  • Limited vs. No Cash-Out Refi
  • No-Closing-Cost Refinance
  • No Appraisal Refinance
  • Refinancing to a 15-Year
  • Refinancing to an ARM
  • Refinancing for Bad Credit

Options by Loan & Property Type

  • Refinance a Jumbo Loan
  • Refinance an FHA Loan
  • Refinance a VA Loan
  • Refinance a Home Equity Loan
  • Refinance a Rental Property
  • Refinance an Investment Property

Mortgage Refi Guides

  • How to Refinance Your House
  • When to Refinance

Tools and Resources

  • Refinance Your Mortgage
  • Best Refinance Companies
  • Pay Off Your Mortgage Early
  • Today’s Mortgage Refi Rates
  • How to Find the Best Lender
  • Lender Reviews

  • Click to share on Facebook (Opens in new window)
  • Click to share on LinkedIn (Opens in new window)
  • Click to share on Twitter (Opens in new window)
  • Click to email a link to a friend (Opens in new window)

Related Articles

Mortgage Refinance

Types of Reverse Mortgages

Mortgage Refinance

Refinancing Your Reverse Mortgage: How It Works

Mortgages

Reverse Mortgages: What They Are and How to Get One

  • Read More
    • Refi Student Loans
    • In School Loans
    • Personal Loans
    • Mortgages
    • Insurance
  • Resources
    • Lender Reviews
    • Loan Calculators
    • Student Loan Score Calculator
    • Data Insights
    • Debt Statistics
    • Sitemap
  • Compare
    • Student Loan Refinance
      • Current Student Loan Refi Rates
    • Student Loan Consolidation
    • Private Student Loans
      • Current Student Loan Rates
    • Personal Loans
      • Current Personal Loan Rates
    • Refinance Mortgage
      • Mortgage Refinance Rates
        • 15-Year Fixed Refinance Rates
        • 30-Year Fixed Refinance Rates
    • Home Loans
      • Home Loan Rates
        • 15-Year Fixed Mortgage Rates
        • 30-Year Fixed Mortgage Rates
    • Insurance
  • Top Lenders
    • Best Student Loan Refi Companies
    • Best Private Student Loans
    • Best Personal Loans
    • Best Mortgage Lenders
    • Best Mortgage Refinance Companies
  • Company
    • About
    • Reviews
    • Blog
    • Editorial Staff
    • Editorial Guidelines
    • News
    • Press
  • Legal
    • Terms of Use
    • Privacy Policy

© 2023 Credible


Credible Operations, Inc. NMLS ID# 1681276 | NMLS Consumer Access | Licenses and Disclosures
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.