There are not a lot of qualifications for a reverse mortgage. The youngest homeowner be 62 years old or older and have adequate home equity (about forty percent).
To determine if there is adequate home equity an FHA calculation takes into account four things:
- Current interest rate
- If the rate will be variable or fixed
- Age of the youngest homeowner
- Location of property
These things do not affect eligibility at all:
- Income
- Credit history
- Discharged bankruptcy
- Health of homeowners
Please feel free to use our reverse mortgage calculator to find out if you have enough equity and what your loan principal limit would be.
FAQ
If a homeowner is not 62 but they are on permanent disability, can they qualify?
No. The FHA only looks at age.
Can someone qualify if they have a mortgage?
Yes. Most people who take out a reverse mortgage use it to pay off their existing mortgage so they no longer have to make the monthly payments.
Do all 62 year olds who own their home qualify?
No. About one third of homeowners who inquire about reverse mortgages are not eligible because they do not have enough equity built up in their home. The older the homeowner is, the less equity they need to qualify.
What happens if there isn’t enough equity to qualify?
When you do not have enough equity it is considered a “shortfall” because the reverse mortgage would not contribute enough funds to pay off the existing mortgage on the home. If this were to happen, some homeowners choose to make up the difference by paying down the balance on their mortgage by the amount of the shortfall so that they may qualify.