Reverse Mortgages in California

You have spent decades paying down your house, and now most of your wealth is sitting in it instead of in your bank account. A reverse mortgage lets you borrow against that equity without making a monthly mortgage payment. Instead of you paying the lender each month, the interest is added to the balance, and the loan is repaid when you sell, move out for good, or pass away. The most common version is the Home Equity Conversion Mortgage (HECM), which is insured by the FHA and follows rules written by HUD.

Who a Reverse Mortgage Is For

You are a good fit if you are 62 or older, you plan to stay in your home, and you would rather spend your equity than leave it untouched. Many people use it to pay off an existing mortgage and stop making that payment altogether. Others keep it as a standby line of credit for medical bills or a bad year in the market. The youngest borrower on title has to be at least 62 for an FHA insured HECM.

How the Money Comes to You

You choose how to take the money. You can take a lump sum, draw from a line of credit when you need it, receive monthly payments, or combine those. If you want a fixed rate, the payout is a lump sum. Any mortgage you still owe gets paid off first, out of the reverse mortgage money, at closing.

What You Need to Qualify

You qualify mostly on your age, your home's value, and current interest rates, not on your paycheck. The older you are and the more your home is worth, the more you can usually receive, up to the FHA HECM limit that HUD sets each year. The lender still checks your credit and whether you can keep paying property taxes and homeowner's insurance. Before you can apply, you meet with an independent HUD approved housing counselor, which HUD requires for every HECM borrower.

What It Costs

Most of the cost comes up front, so this is a loan for people planning to stay put. A HECM carries an upfront mortgage insurance premium and an annual one, both set by HUD. There is also an origination fee, which HUD caps, plus normal closing costs like the appraisal, title and escrow. We show you every one of those costs in writing before you decide, and you can check the monthly numbers on our payment calculator if you are comparing against a regular loan.

How the Loan Ends

The loan comes due when you sell, stop living in the home as your main residence, or pass away. It can also come due early if you stop paying property taxes or insurance, or let the house fall into disrepair. Your heirs can sell the home to repay it, refinance into a regular mortgage to keep it, or hand the house to the lender. An FHA insured HECM is a non recourse loan. You and your heirs will not owe more than the home is worth when it is repaid.

Reverse Mortgage vs a HELOC

A HELOC or home equity loan gives you cash too, but you make a monthly payment from day one and you qualify on your income. A reverse mortgage asks for no monthly mortgage payment, and the balance grows over time instead of shrinking. If you would rather keep your current mortgage and add a smaller loan beside it, the HELOC usually costs less. If you want to stop making payments altogether, the reverse mortgage is the tool built for it.

When a Reverse Mortgage Is the Wrong Answer

If you expect to move within a few years, the upfront costs will eat into what you get, and selling or a regular refinance usually works out better. The same goes if leaving the house to your children free and clear matters more to you than the cash. And if you can comfortably make a payment, a HELOC or cash out refinance is often cheaper. We will tell you that on the first call rather than sell you the wrong loan.

Homes Above the FHA Limit

If your home is worth more than the FHA HECM limit, a HECM can only use value up to that limit. Some lenders offer private jumbo reverse mortgages for higher value homes. They are not FHA insured, and some are available before age 62, so the protections and costs differ from a HECM. Some retirees with large savings compare that path with an asset depletion loan, which qualifies you for a regular mortgage based on your savings. The HECM itself is an FHA product, and our FHA loans page covers how FHA insurance works.

Not sure whether a reverse mortgage fits? Tell us about your home and your plans and we will lay out your options before you fill out anything.