What Types of Homes Qualify for a Reverse Mortgage?

Reverse mortgages are a unique loan option available to homeowners aged 62 and older. This flexible financial tool is used by a wide range of individuals — from those needing to supplement a fixed income, to retirees looking to protect their assets, or even those wanting to buy a new home in retirement.

But while reverse mortgages can serve many purposes, there are specific requirements when it comes to the type of property involved.

What Types of Homes Are Eligible?

According to the Federal Housing Administration (FHA) under HUD, the home must meet certain criteria:

• A single-family home

• A 2- to 4-unit property, as long as the borrower occupies one of the units

• Select condominiums and manufactured homes that are HUD-approved

For those using a Reverse Mortgage for Purchase, the property must be a completed single-family or 2–4 unit home with a Certificate of Occupancy in place.

When Might a Home Not Qualify?

There are a few scenarios where a property may not meet reverse mortgage guidelines:

• If the home has very little equity, it may not qualify — although properties with existing mortgages often can.

• The property must be in good condition and well-maintained. Delinquent property taxes or neglected upkeep can be disqualifying factors.

• The home must be your primary residence. Second homes, vacation homes, or investment properties typically do not qualify.

The Bottom Line

Reverse mortgage funds can be accessed in several ways — as a lump sum, monthly payouts, line of credit, or even to purchase a home. If you’re considering this option, speak with a reverse mortgage specialist. They can help explore creative solutions tailored to your financial goals and personal needs.

Jan Jordan and Kelsey Jorck are Reverse Mortgage Specialist serving the Fort Collins, Loveland, Greeley, Longmont, Boulder and other Front Range areas of Colorado.  Click here to contact them and learn if reverse mortgage is right for you.