How Reverse Mortgages Work and Who They May Be Right For

For many older homeowners, a reverse mortgage can be a useful financial tool when used thoughtfully and with a clear understanding of how it works. While the term is familiar to many people, there is still confusion around what a reverse mortgage actually is, who qualifies, and what responsibilities come with it.

At BRG Mortgage, we believe borrowers should have clear, honest guidance when exploring any loan product. That is especially true with reverse mortgages, where education matters just as much as qualification.

What is a reverse mortgage?

A reverse mortgage is a special type of home loan designed for homeowners who are 62 or older. The most common type is called a Home Equity Conversion Mortgage, or HECM, which is insured by the Federal Housing Administration. With a reverse mortgage, eligible homeowners can borrow against the equity in their home while continuing to live in it as their primary residence.

Unlike a traditional mortgage, borrowers do not make required monthly principal and interest payments to repay the loan. Instead, the loan balance generally grows over time as interest and fees are added. The loan is typically repaid when the last borrower or eligible spouse sells the home, permanently moves out, or passes away.

How does a reverse mortgage work?

A reverse mortgage allows a homeowner to convert a portion of home equity into available funds. Depending on the program and structure, those funds may be received as a lump sum, line of credit, monthly payments, or a combination of these options. HUD notes that there are no restrictions on how HECM borrowers use loan proceeds.

Even though monthly mortgage payments are not typically required, the homeowner still has important obligations. Borrowers must continue to pay property taxes, homeowners insurance, and maintain the home according to loan requirements. Failing to meet these obligations can put the loan into default.

Who may qualify?

Reverse mortgages are generally intended for homeowners who:

are 62 or older
live in the home as their primary residence
either own the home outright or have a low enough mortgage balance that it can be paid off at closing
complete required HUD-approved counseling before closing on a HECM loan

HUD and the CFPB both emphasize the counseling requirement because reverse mortgages are complex products that should be fully understood before moving forward. Homeowners can find a HUD-approved counselor through HUD’s HECM counseling resources.

Why some homeowners consider a reverse mortgage

For the right borrower, a reverse mortgage may help create more financial flexibility in retirement. Some homeowners use it to supplement retirement income, help cover monthly expenses, reduce cash flow pressure, or pay off an existing forward mortgage. Others may use it as part of a broader retirement strategy.

That said, a reverse mortgage is not automatically the right fit for everyone. Because the loan balance increases over time, it can reduce home equity and affect what is left for heirs. It is important to evaluate long-term goals, property responsibilities, and whether staying in the home long-term makes sense before choosing this option. These are practical considerations supported by CFPB educational guidance, and the last point is a planning inference based on how repayment triggers work.

Important things to understand before moving forward

A reverse mortgage is still a loan, not free money. The homeowner keeps title to the home, but the property remains collateral for the loan. Interest continues to accrue, and the balance is repaid later when the loan becomes due.

It is also important to know that reverse mortgage limits can change over time. HUD announced that the 2026 HECM maximum claim amount increased to $1,249,125 for FHA case numbers assigned on or after January 1, 2026.

Because these loans can affect estate planning, monthly cash flow, and long-term housing decisions, homeowners should review them carefully with qualified professionals who understand both the product and the borrower’s goals.

Guidance from experienced professionals matters

At BRG Mortgage, we are proud to have professionals who bring both knowledge and experience to these conversations. Joseph Lam, our Reverse Mortgage Specialist, helps homeowners better understand whether a reverse mortgage may fit their situation and how the process works from start to finish.

We also want to recognize John Del Casale, our Broker, whose more than 40 years of experience bring tremendous value to clients seeking trusted mortgage guidance. In a loan category where clarity and judgment matter, experienced leadership makes a real difference.