The acronym HECM stands for Home Equity Conversion Mortgage. When you see the HECM designation, you know it is referring to the FHA insured Reverse Mortgage, not a proprietary product.
Any designation of "HECM" or "reverse mortage" on this and all other pages of this site alludes to the HECM Reverse Mortgage loan program.
The HECM program at a glance
- All borrowers must be at least 62 years of age. Spouses less than 62 years of age are considered
Non-Borrowing Spouses (NBS).
The NBS will have
life time tenure protection,
and can be on title, but will not be included as a borrower on the loan.
- The home must be their primary residence.
- 3rd party HUD approved counseling is required.
- No loan payments are required on principal or interest.
- Borrowers are responsible for paying property taxes, homeowners insurance and the maintenance of their home.
- HECM Financial Assessment guidelines are used for credit and income qualifying.
- Non-borrowers cannot access any remaining loan funds after the borrower has passed away.
- The HECM can be the only lien on the property. Any current debt against property must be satisfied when the HECM loan is closed.
- FHA property guidelines apply.
- HECM loan products:
- Fixed* or Adjustable rates
- Refinance or Purchase
Loan proceeds can be disbursed as:
- Lump sum
- Line of credit
- Monthly payments
- Any combination of above
Max draw of 60% of loan funds in 1st year.
- May exceed 60% threshold to pay mandatory obligations (current mortgage, closing costs and any other leins against the property).
- If mandatory obligations exceed 60% of the loan amount, borrowers are allowed to draw up to an additional 10% of the loan amount at closing.
*Fixed rate HECM loans must take a full lump sum disbursement at closing, which may make some loan proceeds unavailable. No other draws are available after closing with the HECM fixed rate option.