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.
Non-Borrowing Spouses (NBS)
(spouses less than 62 years of age) are now allowed in the HECM reverse mortgage program. The NBS will have
life time tenure protection,
but will not be on title or 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.
- No non-borrowers are allowed on title.
- 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.