A Home Equity Conversion Mortgage (HECM) is a federally insured reverse mortgage backed by the Federal Housing Administration. It allows homeowners 62 and older to convert part of their home equity into cash without selling or making monthly mortgage payments.

Who Qualifies

To be eligible for a HECM, you must be 62 or older, live in the home as your primary residence, and have significant equity. The property must meet FHA standards, and you must complete counseling with a HUD-approved counselor before applying.

How Much You Can Receive

Your available amount depends on three factors: the age of the youngest borrower, current interest rates, and your home’s appraised value up to the HUD lending limit. Generally, the older you are and the more equity you have, the more you can access.

How You Receive the Funds

HECM proceeds can be taken as a lump sum, monthly payments, a line of credit, or any combination of these. The line of credit option is particularly valuable because the unused portion grows over time, giving you access to more money later.

Repayment

The loan becomes due when you sell the home, move out permanently, or pass away. There are no monthly mortgage payments during the life of the loan. You continue to pay property taxes, homeowners insurance, and maintain the property.

Non-Recourse Protection

Because the HECM is a non-recourse loan, neither you nor your heirs will ever owe more than the home is worth. If the loan balance exceeds the home value at the time of sale, FHA insurance covers the difference.

The Application Process

The process typically takes 45 to 60 days and includes HUD counseling, an application, a home appraisal, underwriting, and closing. An experienced reverse mortgage team handles the coordination so you can focus on your goals, not paperwork.

A HECM can be a powerful tool for retirement planning when used wisely. Understanding how it works is the first step toward deciding if it is right for you.