In short
A reverse mortgage lets homeowners 62 and older borrow against their home equity with no required monthly mortgage payment. The borrower keeps title and remains responsible for taxes, insurance, occupancy, and upkeep; the loan is repaid when the home is sold or the borrower permanently leaves it.
Reviewed by Matt Robertshaw, NMLS #925153 · Last updated July 16, 2026
What is a reverse mortgage and how does it actually work?
A reverse mortgage — most commonly the FHA-insured Home Equity Conversion Mortgage, or HECM — lets homeowners 62 and older borrow against their home equity without making a required monthly mortgage payment. Instead of you paying the loan down each month, the balance grows over time and is repaid when you sell the home, move out permanently, or pass away. You keep the title to your home the entire time. You remain responsible for property taxes, homeowners insurance, and upkeep, and the home must stay your primary residence. Funds can arrive as a line of credit, monthly payments, a lump sum, or a combination.
Key takeaways
Few loan products carry more myths than the reverse mortgage — and few deserve a more honest conversation. For homeowners 62 and older across Hays County and the Hill Country retirement communities I serve, from Lakeway to Spicewood, a reverse mortgage can convert decades of built-up equity into retirement cash flow without a required monthly mortgage payment. It is not right for everyone, and I'll tell you plainly if it isn't right for you. But if most of your net worth is sitting in your house while your monthly budget feels tight, it deserves a clear-eyed look. You cannot take the equity with you.
Let's Deal With the Big Myth First
"The bank takes your house." I hear it constantly, and it's simply not how the program works. With a reverse mortgage, you keep the title to your home. The lender holds a lien — the same as with any mortgage — but you own the house, you live in it, and no one can make you leave as long as you meet the loan's obligations.
What are those obligations? Three things, and I want you to know them before we talk about anything else:
- Stay current on property taxes and homeowners insurance.
- Maintain the home in reasonable condition.
- Live in the home as your primary residence.
Fall seriously behind on those, and the loan can be called due — that's the truth behind the myth, and it's why I put it in front of every client on day one. Meet them, and the loan simply runs until you sell, move out permanently, or pass away.
How a Reverse Mortgage Works
The most common reverse mortgage is the Home Equity Conversion Mortgage (HECM), insured by the FHA. Here's the structure in plain terms:
- You must be 62 or older and have substantial equity in your primary residence.
- Instead of you making a monthly mortgage payment, interest accrues onto the loan balance over time.
- The loan is repaid when the last borrower sells, permanently leaves the home, or passes away — usually through the sale of the house.
- HECMs are non-recourse: neither you nor your heirs owe more than the home's value when the loan is repaid, even if the balance has grown beyond it.
If you still have a regular mortgage on the home, the reverse mortgage pays it off first — which for many retirees means the required monthly payment they've carried for decades simply goes away.
How You Can Receive the Money
There's real strategy in this choice, and it's where I spend most of my time with clients:
- Line of credit — draw as needed; the unused portion of a HECM credit line can grow over time, making it a genuine planning tool.
- Monthly payments — steady income for a set term or for as long as you live in the home.
- Lump sum — a single draw, often used to eliminate an existing mortgage payment.
- A combination of the above.
Which structure fits depends on why you're doing this: eliminating a payment, creating monthly cash flow, building a standby reserve for later years, or some blend. It's not about how much you make — it's about how much you keep, every month, in retirement.
Who This Tends to Fit
Across the Hill Country — Lakeway, Spicewood, Wimberley, Dripping Springs — I meet retirees in the same position: significant equity in a home they love, and a monthly budget that's tighter than their net worth suggests it should be. A reverse mortgage can rebalance that. It tends to fit homeowners who plan to stay in the home for years, want to relieve monthly cash-flow pressure, and see their equity as a retirement asset to be used thoughtfully rather than left untouched by default.
Who Should Think Twice
I'll be just as direct about the other side. A reverse mortgage is usually a poor fit if you expect to move within a few years — the upfront costs don't have time to earn their keep. It reduces the equity that ultimately passes to your heirs, so if leaving the house free and clear is a top priority, we should talk about that trade openly. And if keeping up with taxes, insurance, and maintenance would be a genuine strain, this loan's obligations matter.
Counseling Is Required — and That's a Good Thing
Before you can get a HECM, you must complete a session with an independent, HUD-approved counselor. I like this requirement. It means you get an educated second opinion from someone with no stake in your decision. My job is to make sure that by the time you sit down for it, nothing you hear will be a surprise.
What Heirs Need to Know
When the last borrower passes away or leaves the home, your heirs have options: they can sell the home and keep any equity above the loan balance, pay off the balance and keep the house, or walk away with no further obligation thanks to the non-recourse protection. I encourage clients to bring adult children into the conversation early — the best reverse mortgage decisions are family decisions.
If you're 62 or older in Hays County or anywhere in the Hill Country and you want the honest version of this conversation, I'm glad to have it with you.
This is general information, not a loan offer or a commitment to lend. Reverse mortgage eligibility, costs, and proceeds depend on age, home value, current rates, and program guidelines. Borrowers remain responsible for property taxes, insurance, and home maintenance. Contact me for details specific to your situation.
Quick facts
- Loan type
- Reverse mortgage — most commonly the FHA-insured HECM
- Minimum age
- 62 (youngest borrower)
- Monthly mortgage payment
- None required; balance is repaid when the home is sold or vacated
- Title
- Stays in your name — you own the home
- Ongoing obligations
- Property taxes, insurance, maintenance, primary-residence occupancy
- Required step
- Independent HUD-approved counseling before closing
Is this loan right for you?
Who it's for
- Homeowners 62+ with substantial equity who plan to stay in their home
- Retirees who want to eliminate a required monthly mortgage payment
- Homeowners who want a standby line of credit or monthly cash flow in retirement
- House-rich, cash-flow-tight retirees across the Hill Country and beyond
Who it may not fit
- Homeowners under 62
- Anyone likely to sell or move within a few years
- Owners for whom leaving the home debt-free to heirs is the top priority
- Borrowers who would struggle to keep up with taxes, insurance, and maintenance
Pros and cons
Pros
- No required monthly mortgage payment while you live in the home
- You keep title, and HECMs are non-recourse — heirs never owe more than the home's value
- Flexible payout options, including a credit line that can grow over time
- Can pay off an existing mortgage and free up monthly retirement cash flow
Trade-offs to weigh
- The loan balance grows over time, reducing the equity left to heirs
- Meaningful upfront costs make it a poor fit for short stays
- Ongoing obligations — taxes, insurance, maintenance, occupancy — must be met to keep the loan in good standing
Frequently asked questions
Will I lose my home with a reverse mortgage?
No — you keep the title and you keep living in your home. The loan only becomes due if you sell, permanently move out, pass away, or seriously fail to meet the ongoing obligations: property taxes, homeowners insurance, basic maintenance, and occupying the home as your primary residence. Meet those obligations and no one can require you to leave. I make sure every client understands exactly what those responsibilities are before we go one step further.
What happens to my house when I pass away?
Your heirs choose. They can sell the home, repay the loan from the proceeds, and keep any remaining equity. They can pay off or refinance the balance and keep the house. Or, if the balance exceeds the home's value, they can walk away owing nothing — HECMs are non-recourse, so neither you nor your heirs are ever personally liable beyond the home itself.
Do I still pay property taxes and insurance?
Yes, and this is the obligation that matters most. You must stay current on property taxes and homeowners insurance and keep the home maintained. Falling seriously behind on these is the main way reverse mortgage borrowers get into trouble, so we'll look honestly at whether your budget supports them comfortably before deciding this loan fits.
Can I get a reverse mortgage if I still owe on my current mortgage?
Often, yes — if you have enough equity. The reverse mortgage pays off your existing mortgage first, which eliminates that required monthly payment. Whatever proceeds remain after the payoff are available to you through the payout structure you choose. For many retirees, removing the monthly payment is the entire point.
Is a reverse mortgage expensive?
It has real costs — upfront mortgage insurance, origination and closing costs, and interest that accrues on the balance over time — and I'll show you every one of them in writing before you decide. Whether it's 'expensive' depends on what it does for you: measured against years of eliminated mortgage payments or reliable monthly cash flow, many clients find the trade worthwhile. Measured against a short stay in the home, it usually isn't. That's the honest math, and we'll do it together.
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Last updated July 16, 2026 · Reviewed by Matt Robertshaw, NMLS #925153. This page is educational and not a commitment to lend; program details change — ask for current figures.