Reverse mortgages: what older homeowners should know
August 6, 2026
Reverse mortgages have a reputation problem, and most of it is undeserved. For homeowners 62 and older who have built up equity in their homes, this type of loan can be a practical way to access cash without selling or taking on a traditional monthly payment. The key is understanding exactly how the product works before deciding whether it fits your situation.
A reverse mortgage lets a qualifying homeowner borrow against the value of their home, with the lender paying the homeowner instead of the other way around. The borrower must be at least 62 years old, live in the home as their primary residence, and have sufficient equity built up. Funds can be received as a lump sum, a line of credit, or monthly payments, depending on what the homeowner needs. Because the borrower is not required to make monthly mortgage payments, the loan balance grows over time as interest and fees are added to the total owed.
One of the biggest misconceptions is that the bank takes ownership of the home. That is not how it works. The homeowner retains title and continues to live in the property, with the responsibility to pay property taxes, homeowners insurance, and maintain the home. The loan only becomes due when the borrower sells, moves out permanently, or passes away. Another common worry is that heirs will be stuck with a huge debt, but the heirs can simply pay off the balance or sell the home, and they never owe more than the home's appraised value at the time of repayment.
Reverse mortgages tend to make the most sense for homeowners who plan to stay in their home long-term and have a specific need for additional cash flow. Common uses include covering medical expenses, supplementing retirement income, paying off an existing mortgage to eliminate monthly payments, or making home improvements that allow someone to age in place comfortably. They are not the right move for someone planning to move in the next few years, or for homeowners who have other, less expensive options available. Counseling through a HUD-approved agency is required for most borrowers, and it is a step worth taking seriously before signing anything.
A reverse mortgage is a tool, and like any tool, it works well in the right hands and poorly in the wrong ones. The right homeowner, with the right expectations and the right guidance, can use it to make retirement more comfortable without giving up the home they have built a life in.