Turn Home Equity Into Income, Without a Monthly Payment

A reverse mortgage is a loan available to homeowners generally age 62 and older that works in the opposite direction of a traditional mortgage. Instead of you making monthly payments to the lender, the lender pays you, drawing from your home's equity, whether as a lump sum, monthly payments, or a line of credit you access as needed. The loan balance grows over time instead of shrinking, and it's typically repaid when the home is sold, the last borrower moves out permanently, or passes away.

The most common version is a HECM, a home equity conversion mortgage, insured by the FHA. There's no required monthly mortgage payment as long as you live in the home as your primary residence, keep up with property taxes and insurance, and maintain the property, which is a real appeal for retirees looking to free up cash flow without taking on a new monthly bill.

A reverse mortgage isn't the right fit for everyone. It reduces the equity left in the home over time, which affects what's left for heirs, and there are real costs and counseling requirements built into the process. It's a decision worth walking through carefully with your family, and HUD requires a counseling session with an independent, HUD-approved counselor before you can move forward.