A reverse mortgage is a type of loan available to homeowners aged 62 or older that allows them to convert a portion of their home equity into cash. Unlike a traditional mortgage, the loan does not need to be repaid until the borrower no longer occupies the home as their primary residence.

With a reverse mortgage, the borrower receives payments from the lender based on the equity in their home. The loan balance increases over time as interest accrues, and the borrower does not need to make monthly payments. When the borrower no longer occupies the home as their primary residence, the loan must be repaid, typically by selling the home.

A reverse mortgage can provide additional income for retired homeowners who need it, without requiring them to sell their home. The loan does not need to be repaid until the borrower no longer occupies the home, and the borrower can choose to receive payments as a lump sum, line of credit, or monthly installments.

Reverse mortgages can be more expensive than traditional mortgages, with higher fees and interest rates. The loan balance increases over time, potentially reducing the amount of equity available to the borrower’s heirs. If the borrower does not maintain the home or pay property taxes and insurance, they may default on the loan and be at risk of foreclosure.

To qualify for a reverse mortgage, you must be at least 62 years old and own your home outright or have a low mortgage balance that can be paid off with the loan proceeds. You must also occupy the home as your primary residence and meet certain financial eligibility requirements, such as demonstrating the ability to pay property taxes and insurance.

The amount you can borrow with a reverse mortgage depends on several factors, including your age, the appraised value of your home, and current interest rates. You can use a reverse mortgage calculator to estimate the amount of your loan.