Minimum Age Requirements: HECM vs. Proprietary Loans
There is a distinction in minimum age requirements between Home Equity Conversion Mortgages (HECMs) and proprietary reverse mortgages.
The HECM Standard: Age 62 and Older
The HECM, insured by the FHA, is the most common reverse mortgage. It mandates that the youngest borrower on the title be at least 62 years old at closing. This rule is a core part of the HECM program, influencing the amount of equity accessible alongside home value and interest rates.
Proprietary Reverse Mortgages: Age 55 and Up
Proprietary reverse mortgages are private loans, often for higher-value homes, which can offer more flexible terms, including a lower minimum age. Some programs may be available to homeowners as young as 55, though the specific age can vary by lender and state regulations. These loans may have different costs and terms compared to HECMs.
Is There a Maximum Age for a Reverse Mortgage?
No, there is no upper age limit for obtaining a reverse mortgage. Borrowers over 62, including those in their 80s or 90s, can apply if they meet other criteria. Older borrowers may qualify for larger loan amounts as age is a factor in calculating the principal limit factor.
The Age Factor and Your Loan Amount
A borrower's age significantly impacts the potential loan amount. The Principal Limit Factor (PLF), a percentage of the home's value, increases with age, allowing older borrowers to access more equity. The home's appraised value (up to FHA limits for HECMs) and current interest rates also influence the amount.
Age Requirements for Spouses
HUD updated HECM rules in 2017 to protect younger spouses (under 62). A younger spouse on the title can be an 'eligible non-borrowing spouse,' allowing them to remain in the home after the borrowing spouse's death, provided HUD conditions are met.
Comparison of HECM and Proprietary Reverse Mortgages
| Feature | HECM Reverse Mortgage (Age 62+) | Proprietary Reverse Mortgage (Age 55+) |
|---|---|---|
| Minimum Borrower Age | 62 | 55 (varies by lender and state) |
| Maximum Borrower Age | None | None |
| Insured by HUD/FHA | Yes | No |
| Borrowing Limit | Capped at FHA lending limits | Can be much higher for high-value homes |
| Non-Borrowing Spouse | Protected under HUD rules | Varies by lender policy; less standardized |
| Typical Interest Rates | Generally lower | May have higher rates |
| Mortgage Insurance | Required | Not required |
Other Eligibility Factors Beyond Age
Beyond age, eligibility for a reverse mortgage includes other factors:
- Property Ownership: Significant equity or outright ownership is required to pay off existing mortgages.
- Primary Residence: The property must be the borrower's main home.
- Financial Assessment: Lenders evaluate the borrower's ability to pay property taxes, insurance, and maintenance. A Life Expectancy Set-Aside (LESA) may be needed.
- Mandatory Counseling: HECM applicants must complete counseling with a HUD-approved advisor to understand the loan details and alternatives.
Conclusion: Finding the Right Path
Understanding what is the age limit on a reverse mortgage is key to exploring this option. The HECM has a 62+ age minimum, while proprietary loans may start at 55. There is no maximum age, and older individuals may access more equity. Always consider your financial situation, seek counseling, and compare lenders. For more information, consult the Consumer Financial Protection Bureau: https://www.consumerfinance.gov/consumer-tools/reverse-mortgages/
