How Does a Reverse Mortgage Work?
Unlike traditional mortgages, where homeowners make payments to the lender, in a reverse mortgage, the lender pays the homeowner. The loan is repaid when the homeowner sells the home, moves out permanently, or passes away.
Key Features:
- Must be 62+ years old
- Must live in the home as your primary residence
- Retain ownership of your home
- Loan proceeds can be received as lump sum, monthly payments, or line of credit
- Repayment is not required until a qualifying event occurs
Common Uses for Reverse Mortgages
- Supplementing retirement income
- Paying off existing mortgage or debts
- Covering medical expenses
- Funding home improvements
- Avoiding early withdrawals from retirement accounts
Types of Reverse Mortgages in the U.S.
| Type | Description |
| HECM (Home Equity Conversion Mortgage) | Federally insured and most common reverse mortgage, backed by the FHA |
| Proprietary Reverse Mortgage | Offered by private lenders, often for high-value homes |
| Single-Purpose Reverse Mortgage | Offered by some state and local government agencies for specific uses (e.g., home repairs or taxes) |
Pros:
- Access home equity without selling
- No monthly mortgage payments required
- Flexible payout options
- Federally insured HECM loans offer consumer protections
Cons:
- Fees and interest can be high
- Reduces home equity over time
- May affect eligibility for Medicaid or SSI
- The home may need to be sold to repay the loan after death
How Much Can You Get From Reverse Mortgages?
Loan amounts are based on:
- Age of the youngest borrower
- Home’s appraised value
- Current interest rates
- FHA lending limits
Recommended Reverse Mortgage Calculator
Want an estimate? Use a reverse mortgage calculator to determine how much equity you can access.
Here is the recommended Best Reverse Mortgage Companies in the U.S. (2025):
| Calculator Tool | Features & Highlights | Website Link |
| FAR Reverse Mortgage Calculator | From Finance of America Reverse; tailored for HECM & proprietary loans | https://www.financeofamerica.com/resources/calculator/ |
| ARLO™ by All Reverse Mortgage | Advanced calculator with detailed projections & payout options | reverse.mortgage |
| Longbridge Reverse Mortgage Calculator | Easy to use; estimates both lump-sum & monthly disbursements | longbridge-financial.com |
| Mutual of Omaha Reverse Calculator | Fast estimates, personalized offers after inputting home & borrower details | mutualreverse.com |
Best Reverse Mortgage Companies in the U.S. (2025)
| Company Name | Key Advantages | Best For | Official Website |
| Finance of America Reverse (FAR) | Industry leader, wide product selection (HECM & proprietary loans) | Homeowners with high-value homes needing customized plans | far.com |
| Mutual of Omaha Mortgage | Excellent customer service, strong reputation, educational resources | First-time applicants, conservative borrowers | mutualreverse.com |
| AAG (American Advisors Group) | One of the largest providers, widely recognized, simple application process | Retirees seeking fast access to funds | aag.com |
| Longbridge Financial | Transparent fees, supports lower home values, no monthly servicing fees | Retirees with limited income | longbridge-financial.com |
| Liberty Reverse Mortgage | Fast loan processing, no hidden fees, competitive long-term rates | Homeowners seeking quick approval | libertyreverse.com |
Final Thoughts
A reverse mortgage can be a smart retirement tool for seniors looking to stay in their home while unlocking its value. However, it’s important to understand all terms, fees, and long-term impacts before making a decision.