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How do I qualify for a reverse mortgage?

To be eligible for a HUD reverse mortgage, HUD’s Federal Housing Administration (FHA) requires that the borrower is a homeowner, 62 years of age or older; own your home outright, or have a low mortgage balance that can be paid off at the closing with proceeds from the reverse loan; and must live in the home. You are further required to receive consumer information from HUD-approved counseling sources prior to obtaining the loan. You do not need good credit to qualify.

Can I apply if I didn’t buy my present house with FHA mortgage insurance? Yes. It doesn’t matter if you didn’t buy it with an FHA-insured mortgage. Your new HUD reverse mortgage will be a new FHA-insured mortgage loan.

What types of homes are eligible? Your home must be a single family dwelling or a two-to-four unit property that you own and occupy. Townhouses, detached homes, units in condominiums and some manufactured homes are eligible. Condominiums must be FHA-approved. It is possible for individual condominiums units to qualify under the Spot Loan program.

What’s the out-of-pocket cost? The out-of-pocket cash cost to you is most often limited to an application fee that covers a property appraisal (to see how much your home is worth) and a minimal credit check (to see if you are delinquent on any federally-insured loans).

Most of the other costs can be “financed” with the loan. This means that you can use reverse mortgage funds advanced to you at closing to pay the costs due at that time, and later advances to pay any ongoing costs. The advances are added to your loan balance, and become part of what you owe – and pay interest on.

If a lender charges an origination fee that is greater than the amount that can be financed with the loan, you have to pay the difference in cash at closing.

Interested in learning more? Please request a free consultation and we’ll help you determine if a reverse mortgage is right for you.

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DS Consulting
15281 Weeks Dr.
La Mirada, CA 90638
Phone: 562-902-2677

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Dennis Sanchez
NMLS #281480
BRE #01179128
California CPA #34077 (inactive)
DS Consulting
NMLS #793097
Equal Housing Opportunity

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