Reverse Mortgages

Learn the minimum requirements to qualify for a reverse mortgage loan. See how easy the process can be.

Reverse Mortgage: Do You Qualify?

Reverse mortgage requirements are much more lenient than those of a traditional mortgage loan. Even if you have been turned down for a traditional mortgage, if you meet the minimum requirements below, a reverse mortgage might release you of financial burdens and give you a new freedom to enjoy your golden years. Make sure you meet at least these minimum qualifications below before you invest much of your time or money into the application process.

  • Age: In the United States, according to the Department of Housing and Urban Development, the youngest applicant for a reverse mortgage must be at least 62 years old. There is no maximum age limitation. In fact, the older you are when you apply for a reverse mortgage, the more money you are likely to qualify to receive.
  • Property Types: You must live in the home as your primary residence. No second homes or rental properties will qualify. The property must be a single family residence, or a 1-4 unit with -approved condo. If the property is a manufactured home, it must be build after 1976, on a permanent foundation, and you must own the land. If your property is unique (like a log home or geodesic dome), discuss the specific details of your property thoroughly to make sure it will be approved.
  • Home Equity: Ideally, the home will be owned free and clear of any bank loans and liens. However, you can apply for a reverse mortgage even if you already have a mortgage on your home. The amount of equity you have in the home (that portion of the home's value greater than any loans or liens) will determine your eligibility--there has to be enough equity for the new loan to completely pay off the old obligation.
  • Counseling: On every FHA reverse mortgage loan, counseling is required from an agency approved by the Department of Housing and Urban Development. Reverse mortgage loans are sophisticated lending instruments. It is very important that you completely understand how this loan might effect you and your estate. To find a counseling center, call (800) 569-4287. Or you can go to HUD's counseling listings by state.
  • Credit History: There is no minimum credit score required. Bad, even horrible credit will not disqualify you for a reverse mortgage. However, if you are in the process of filing bankruptcy, your reverse mortgage application will likely be delayed until the bankruptcy is discharged.
  • Income: Because a reverse mortgage loan pays out to a senior homeowner, there are typically no income requirements to qualify for the loan. However, those with very low incomes who just need money to pay their property taxes or do some maintenance may qualify for special purpose loans--available through governments or charitable groups. Thse loans come at little or no cost and charge little or no interest.The intention of a reverse mortgage is to supply the senior with added cash flow to meet their living expenses. You might be approved for a larger loan amount using a reverse mortgage than you would be for a traditional mortgage because your current income will not be a factor in the amount of money you can receive.

Renee Morgan
Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.