A reverse mortgage is a special home loan that lets qualified seniors tap into their home’s equity without moving out or selling. In this loan, the lender pays you, and you don’t make monthly payments. Instead, the balance grows over time and is repaid when the home is sold, or you move or pass away. You still own your home, and federal rules guarantee you’ll never owe more than the home is worth. Most reverse mortgages are called HECMs (Home Equity Conversion Mortgages), which are insured by the FHA. This guide breaks down the reverse mortgage process for seniors, including the new HECM limit for 2025.

For a full overview, also check out our 2024 blog on how reverse mortgages work.

Step 1: Check Your Eligibility

You must meet key requirements:

• Be at least 62 years old – Required by FHA.
• Own your home outright or have low mortgage balance – The property must be your primary residence.
• Have enough home equity – Often 50% or more.
• Stay current on taxes and insurance – You must pay these and maintain the home.
• Complete a HUD counseling session – Ensures you understand your options.

For full details, visit Mortgage Maestro’s Reverse Mortgages page.

Step 2: Attend Counseling

Before closing, you must meet with a HUD-approved counselor who will explain the loan, its costs, and alternatives. After counseling, you can decide whether to move forward.

Step 3: Apply with a Lender

Contact a HECM lender like Mortgage Maestro Group to start the application. The lender will:

• Gather your financial information.
• Order a home appraisal.
• Perform a financial assessment.

Your available loan is based on your age, home value, and the FHA loan limit. Older borrowers with higher-value homes can typically borrow more.

Step 4: Choose Payment Plan and Close

At closing, you choose how to receive funds:

• Lump sum – One large payment.
• Monthly payments – Regular income.
• Line of credit – Draw funds as needed.

Many choose the line of credit, as unused funds remain available. You do not make monthly mortgage paymentsY. Interest is added to the balance and repaid later.

Funds are not taxable income and typically don’t affect Social Security or Medicare. This adds financial flexibility in retirement.

Step 5: After Closing – Managing Your Loan

You can use the money however you want—pay bills, cover health costs, or improve your home. You must continue paying property taxes, insurance, and maintain the home. If not, the loan may become due.

With HECMs, you never owe more than the home’s value. If the loan balance exceeds the sale price, FHA insurance covers the difference. This “non-recourse” feature protects your estate and heirs.

Step 6: Repaying the Loan

The loan is repaid when the last borrower leaves the home or passes away. The home is sold, and the loan is paid off from the sale. Any remaining equity goes to you or your heirs.

Mortgage Maestro explains that heirs can sell the home or repay the loan. If the home sells for less than the balance, your estate does not owe the difference.

2025 HECM Lending Limit

As of January 1, 2025, the HECM limit is $1,209,750, up from $1,149,825 in 2024. Only the first $1,209,750 of your home’s value is used to calculate your loan. This helps borrowers in higher-value homes access more equity.

For example, on a $1.5 million home, only $1,209,750 counts toward your loan limit in 2025. This change improves borrowing power for seniors in expensive markets.

Is a Reverse Mortgage Right for You?

A reverse mortgage offers added financial flexibility. It’s not free money—it’s a loan repaid later—but it can supplement retirement income and help with housing or health costs.

If you’re 62 or older with enough home equity, a reverse mortgage may make sense. You get tax-free funds, make no monthly payments, and keep your home. The loan is repaid when you leave or sell the home, and any leftover equity goes to your heirs.

To learn more, visit Mortgage Maestro’s Loan Process and Mortgage Calculator pages. For a personal consultation, contact Mortgage Maestro Group or call 303-779-0591.

Key Takeaways:

• Available to homeowners age 62+ with equity.
• No monthly payments; loan repaid later.
• Keep your home and get flexible payout options.
• FHA-insured: never owe more than home’s value.
• 2025 HECM limit: $1,209,750.

Talk with a trusted advisor to see if this fits your retirement needs.