Reverse Mortgage FAQs

A reverse mortgage is a home-secured loan that allows homeowners age 62 and older to convert a portion of their home equity into cash, monthly income, or a line of credit—without required monthly mortgage payments (must maintain the home and pay property taxes and homeowners insurance). Repayment is deferred until the borrower sells the home, moves out, or passes away.

A reverse mortgage pays you based on your available home equity. Instead of making monthly mortgage payments, interest accrues on the loan balance over time. The loan is repaid when the home is sold or no longer used as a primary residence.

Borrowers use reverse mortgages for a variety of reasons, including:

• Increasing monthly cash flow
• Funding home improvements or long-term care
• Financial and retirement planning
• Lifestyle flexibility
• Insulating their portfolio

There are many advantages of a reverse mortgage, like its flexible repayment feature and non-recourse feature. There are also potential downsides, such as the unpaid reverse mortgage loan balance grows over time as interest and fees get tacked on.

Fairway offers the following reverse mortgage loans:

• Home Equity Conversion Mortgages (HECM)
• Jumbo Reverse Mortgages
• Home Equity Conversion Mortgage for Purchase (H4P)
• HomeSafe Second

• Tax-free loan proceeds*
• Increased cash flow in retirement
• Retain homeownership
• Flexible disbursement options
• No repayment required until a maturity event

*This does not constitute tax advice. Please consult a tax advisor for your specific situation.

• Be 62 years or older
• Have significant home equity
• Live in the home as your primary residence
• Meet basic credit and property requirements
• Complete HUD-approved counseling
• Must not be delinquent on any federal debt

You must continue to pay property taxes, maintain homeowners insurance, and keep the home in good condition.

Reverse mortgages are available through FHA-approved lenders. You can work with a lender like Fairway or explore other approved options.

No. Reverse mortgages are legitimate financial products regulated by the federal government. Misconceptions are often based on outdated information.

• Being under 62
• Insufficient home equity
• Ineligible property type
• Not using the home as a primary residence
• Not meeting minimal credit and income requirements
• Delinquent federal debt
• Not completing required counseling

It depends on your financial goals. For many, it’s a useful retirement tool, but it’s best evaluated with a financial professional.

Yes, there are situations in which you can get out of a reverse mortgage. For instance, you could pay off your reverse mortgage loan balance in full, refinance your reverse mortgage into another reverse mortgage or a standard mortgage, or sell your home. When you sell your home, the reverse mortgage loan balance would become due and payable in full.

Yes. Usage has increased in recent years as more retirees look to leverage home equity strategically.

Your reverse mortgage home must be your primary residence, meaning you live there at least 6 months and one day per year.

If you want to keep the home:

• Pay off or refinance the loan
• Purchase the home for 95% of appraised value

If you don’t want to keep the home:

• Sell the home and keep remaining equity
• Walk away if the loan exceeds home value (non-recourse protection)

The loan becomes due and payable. Heirs can sell the home, refinance, or pay off the balance.

A reverse mortgage can help one spouse remain in the home by buying out the other.

It depends. Some families will receive more by being more efficient with the use of their portfolio of assets. However, it is very important that you consult with your financial advisor to make the best use of a reverse mortgage for your specific situation.

Yes. You must continue paying property taxes and insurance. In some cases, funds can be set aside from loan proceeds to cover these.

Rates vary based on loan type and market conditions. Adjustable-rate loans are based on an index plus a lender margin. To find out what the current reverse mortgage interest rates are, please reach out to a Fairway retirement mortgage specialist.

For HECMs, lending is capped based on the home value up to the FHA limit (currently $1,209,750).

Yes. You retain full ownership and can sell at any time. The loan balance is repaid from the sale.

Your current loan doesn’t change, but increased value may allow for refinancing and additional borrowing capacity. That said, a rising home value can benefit you in many other ways, such as potentially increased borrowing capacity if you decide to refinance the reverse mortgage into a new one.

Rising home values can increase available equity, making reverse mortgages a potentially useful tool during inflationary periods.

The loan is typically repaid through the sale of the home after a maturity event. You or your heirs are not personally liable beyond the home’s value.

Yes—often to access more equity or secure better terms. There are many reasons to refinance a HECM, but the primary purposes are to 1) increase borrowing capacity and 2) reduce interest rate and accrual charges.

No. Loan proceeds are generally not considered taxable income*.

*This content does not constitute tax advice. Please consult a tax advisor regarding your specific situation.

You can remain in your home. The loan simply accrues interest until repayment is triggered.

Suze Orman has viewed reverse mortgages as a viable option for retirees.

Nothing. Reverse mortgages are non-recourse loans, meaning you’ll never owe more than your home is worth—as long as you continue living in the home and meet your obligations (property taxes, insurance, and maintenance).

You can choose from several flexible payout options:

• Lump sum payment
• Monthly income (tenure or term)
• Line of credit (grows over time)
• Combination of these options

The right option depends on your financial goals and cash flow needs.

Yes. If you still have available funds, you can change your disbursement option for a small, one-time fee.

No. Reverse mortgages do not require monthly principal or interest payments. However, you must continue to pay property taxes, homeowners insurance, and maintain the home. You may choose to make voluntary payments if it benefits your financial strategy.

Your down payment depends on your age, interest rates, and the home’s value (based on the lower of the purchase price or appraised value). Use our reverse mortgage calculator to estimate your costs and eligibility.

When using a HECM for Purchase (H4P), the HECM is for your newly purchased home.

A reverse mortgage is the only type of mortgage that never requires a payment of principal and interest until the last surviving borrower passes away or moves out of the home, as long as all loan terms are met. You are always required to pay household expenses such as taxes and insurance, and maintain your home. You can choose to make payments at any time, which may help preserve equity or increase available line of credit funds.

Yes. You can use the reverse mortgage loan proceeds for just about anything, including:

• Medical bills
• In-home care
• Long-term care services
• Medical procedures
• And much more

It can. While reverse mortgage proceeds are generally not considered income,* funds retained in your bank account may count toward Medicaid asset limits. Rules vary by state, so it’s important to consult a financial advisor.

*This does not constitute tax advice. Please consult a tax advisor for your specific situation.

If the move is temporary (such as rehabilitation), your loan remains in good standing.

If the home is no longer your primary residence for an extended period, the loan may become due and payable.