I'm not here to tell you a reverse mortgage is right for you. I'm here to answer the questions Michigan homeowners 62 and older ask me, along with the ones their grown children ask me, usually on a separate call: whether Mom can stay in the house, whether she still owns it, what happens to it when she's gone, and whether a HECM really ends the mortgage payment. Some of those answers make a reverse mortgage look better than people expect, and some of them are the reason I talk people out of it.
I'm Rob McKenney, an independent mortgage broker in Milford, Michigan, and I help homeowners and their families in Howell, Brighton, Hartland and across the state figure out whether a reverse mortgage, or a HECM for Purchase, actually fits. Call or text (810) 819-8686 and ask me the question you would ask a friend in the business.
Ask Me Your Question → Call (810) 819-8686Jump to the one that brought you here. Each answer is written for the homeowner and for the son or daughter helping them think it through.
The formal name is a Home Equity Conversion Mortgage, which everybody shortens to HECM. It's a loan insured by the Federal Housing Administration, available to homeowners 62 and older on the home they live in, and it lets you turn part of your equity into a lump sum, a line of credit, monthly advances, or simply into paying off the mortgage you already have.
On a regular mortgage you make a payment every month and the balance goes down. On a HECM there's no required monthly principal and interest payment for as long as you live in the home and keep up with the loan's terms, so the interest and mortgage insurance are added to the balance instead, and the balance grows over time. That's the trade, and it's the whole idea in one sentence. You're still free to make payments whenever you want, and there's no penalty for paying it down or paying it off early.
It's also non-recourse, which means the debt is secured by the house and nothing else. When the loan is finally repaid, neither you nor your heirs will owe more than the home is worth, even if the balance has grown past its value, because FHA's insurance covers the difference.
A fixed-rate HECM pays out as a single lump sum at closing, while the line of credit and monthly advance options come with the adjustable-rate version. Which one fits depends on what you need the money to do, and it's one of the first things you and I will sort out together.
This is the question behind most of the calls I get, and the honest answer is yes, for as long as she lives there as her primary residence and keeps up the obligations that come with the loan. Those obligations are the part a lot of reverse mortgage advertising skips, so here they are in full.
Property taxes stay current. Paid on time, every year, for as long as the loan is in place.
Homeowners insurance stays in force. Continuous coverage with no lapses, plus flood insurance if the home is in a flood zone that requires it.
Association dues stay current. Condo or HOA dues and any special assessments, if the property has them.
The home stays maintained. Reasonable upkeep and repairs, the way any lender expects of a home it has a loan on.
She lives there as her primary residence. Not a second home and not a rental, and she confirms that she still lives there once a year.
Her equity goes down, not up. The family keeps whatever is left, but there will be less than if she had never borrowed.
Falling behind on the taxes or insurance, or letting the home fall into serious disrepair, is a default, and a HECM can be foreclosed on like any other mortgage. A reverse mortgage does not make anyone foreclosure-proof, and anybody who tells your parent otherwise is selling something.
The residence rule has one detail every family should know about. If she moves out permanently and no other borrower still lives there, the loan becomes due, and that can include a health-related stay away from home, such as in assisted living or a care facility, that lasts more than twelve months in a row. A shorter hospital stay or a few months of rehab with a plan to come home is a different situation, and it's worth letting the servicer know about either one.
A HECM is a loan secured by the house, the same way her current mortgage is. She isn't selling the home, and she isn't signing it over to a bank or to the government. She can sell it whenever she likes, pay the loan off from the sale and keep what's left, and she can leave the home to whomever she chooses. What changes is how much equity is left at the end, because the balance grows instead of shrinking.
If someone else is already on the title, such as a son or daughter who was added to the deed years ago, or if the home is held in a trust, that doesn't automatically rule anything out. It does need to be worked through before closing, because every owner on the title takes part in the process and goes through counseling, so I'd much rather hear about it on the first call than discover it in the title work.
Yes, the family can keep it if they pay off the loan, and nobody inherits a debt bigger than the house. When the last borrower passes away, the loan becomes due and the servicer sends notice to the estate. From there, the family has three basic choices.
Pay off the loan, usually by refinancing into a mortgage of your own or with other funds. If the balance has grown larger than the home is worth, the family can keep it by paying the lesser of the balance or 95 percent of its current appraised value.
Sell it, repay the loan from the proceeds and keep whatever's left. If the home is worth less than the balance, a sale for at least 95 percent of its appraised value settles the loan, and FHA's insurance absorbs the rest.
If there's no equity left and nobody wants the house, the estate can sign it over to the servicer with a deed in lieu of foreclosure, and there's no bill to anyone for the shortfall.
Timing matters more than families expect. The estate has thirty days after the due-and-payable notice to tell the servicer what it plans to do. The loan generally has to be resolved within six months of the date it became due, or the servicer begins foreclosure, although with HUD's approval up to two ninety-day extensions are available when the family can show it's actively marketing the home or lining up the financing to pay off the loan. The single most useful thing a family can do is call the servicer early and stay in touch, because silence is what turns a manageable timeline into a tight one.
If you keep the house, there's one more Michigan point worth knowing. A transfer of a home from a parent to a child is generally exempt from uncapping its taxable value, provided the home's use doesn't change afterward, so a family that moves in may keep the lower tax base while one that rents the house out may not. Confirm the details with the local assessor or the estate attorney before you decide.
The youngest borrower has to be at least 62. A younger spouse can't be a borrower, but they can be named as an eligible non-borrowing spouse, which lets them stay in the home after the borrowing spouse dies as long as they were married at closing and stayed married, are named in the loan documents, lived in the home at closing and keep living there, and keep up the taxes, insurance and upkeep. There are two trade-offs to understand before closing: the younger spouse's age is used in the calculation, which lowers the amount available, and once the borrowing spouse has passed away, no more money can be drawn from the loan.
An adult child who lives in the home but isn't on the loan doesn't have that protection. After the last borrower passes away, they can stay only if the family pays off or refinances the loan, so that's a conversation to have out loud, early.
If she has a mortgage now, a HECM pays it off at closing, and from then on there's no required monthly principal and interest payment for as long as she lives there and meets the loan's terms. For a lot of retirement budgets, that's a meaningful change. What it doesn't remove is the cost of owning the home, because property taxes, insurance, any association dues and upkeep all remain hers to pay, every year, for as long as the loan is in place.
If the budget is already tight on those costs, the loan's financial assessment will show it. HECM underwriting looks at credit, income and her history of paying taxes and insurance, and when that picture is shaky, one common outcome is a set-aside, where part of the loan is reserved to cover taxes and insurance going forward, and in the most common version the servicer pays those bills from it. A set-aside reduces the money available to her and generally can't be removed later, so it's a real trade rather than a perk, but for some families it's exactly the safety net they were hoping for.
One more word of caution about how these loans are sometimes described. HECM proceeds are loan advances, which the IRS doesn't treat as income, but that doesn't make the house tax-free, since property taxes still apply, and money left sitting in an account can count against need-based benefits such as Medicaid or SSI. A tax professional or benefits counselor should look at her situation before she borrows.
A HECM has to be the first lien on the home, so any existing mortgage, home equity line or other lien is paid off at closing, usually from the HECM's own proceeds, and whatever is left after that payoff is what's available to her.
This is the most common reason I advise someone against a reverse mortgage. How much a HECM can provide depends on the age of the youngest borrower or eligible non-borrowing spouse, expected interest rates and the home's appraised value, counted up to FHA's national limit, which is $1,249,125 for 2026. There's no fixed equity percentage, whatever an ad might say. If the current balance is larger than what the HECM can provide, the loan only closes if she brings the difference to the table, and while that's occasionally worth doing, more often it isn't, and I'll tell you which one you're looking at.
There's also a limit on the first year. During the first twelve months, how much can be drawn is capped, with room built in for paying off an existing mortgage and a smaller allowance for cash beyond that. It exists to keep people from spending everything in year one, and it matters for anyone planning a large expense right after closing.
A lot of the downsizing conversations I have start with a two-story house that has become hard to manage and a ranch or a condo closer to family. HECM for Purchase lets a buyer 62 or older buy that next home with a down payment of their own plus reverse mortgage proceeds, in a single closing, with no required monthly principal and interest payment on the new home afterward. The same obligations come along with it, so taxes, insurance, dues and upkeep on the new place are still hers.
A few rules shape how the move comes together:
The new home has to become her primary residence within sixty days of closing, and it stays subject to the same occupancy rules as any HECM from then on.
It can come from savings, the sale of her current home or other assets, or a gift. HUD doesn't accept borrowed money for it, such as a bridge loan or a home equity line on the old house, which is different from how many move-up buyers bridge the gap.
Single-family homes, two-to-four unit homes she'll live in, FHA-approved condos and qualifying manufactured homes are eligible. Sellers can contribute toward closing costs within HUD's limits, and a newly built home needs its certificate of occupancy.
The practical result is that most HECM for Purchase downsizers either sell first or have the funds already set aside to buy first. If you're weighing that order of operations, my buy-before-you-sell guide walks through the whole sequence, and my seller net sheet shows what the current house is likely to leave after the sale. You and I will put those two numbers side by side before anything gets listed, so the plan is settled before the sign goes up.
Before a HECM can move forward, every borrower, along with any non-borrowing spouse and anyone else on the title, has to complete a session with a HUD-approved HECM counselor. The counselor is independent: they aren't paid by me, they don't work for my company, and they have no stake in whether she goes ahead. Until the counseling certificate is signed, the lender can't order an appraisal or charge application fees. The counseling agency may charge its own fee, which in some cases can be paid from the loan at closing, and the certificate stays valid for 180 days.
Some loan officers treat counseling as a hurdle to get past. I think it's the best part of the program. Counselors generally welcome family members to take part, so bring the questions you'd ask me, and if a reverse mortgage is wrong for her situation, you'll hear it from a neutral third party before anything meaningful has been spent. HUD keeps the list of approved counselors at (800) 569-4287. If anyone tries to rush your parent past this step, that tells you what you need to know about them.
A HECM costs more to set up than most home equity lines. There's FHA mortgage insurance, charged once at closing and then yearly on the balance, an origination fee that HUD caps, and the usual third-party closing costs such as the appraisal, title work and recording. Most of it can be paid from the loan itself, which is convenient and also means it adds to the balance from the first day. I don't quote those figures on a web page, because they depend on the home's value and the options she chooses, but I'll put every one of them on paper next to the alternatives, and she'll see them again in the counseling session.
| HECM reverse mortgage | HELOC | |
|---|---|---|
| Monthly payment | No required principal and interest payment while she lives there and meets the loan terms; voluntary payments allowed | Required every month, with the payment rising once the draw period ends |
| Who qualifies | Homeowners 62 and older, with a financial assessment of credit, income and the history of paying taxes and insurance | Any age, qualified on income and debt like a typical loan |
| The unused line | Grows over time, and HUD rules don't allow it to be cut because home values dipped | Stays flat, and the lender can freeze or reduce it in certain situations, such as a significant drop in home value |
| Cost to set up | Higher: mortgage insurance, a capped origination fee and closing costs | Usually lower |
| Balance over time | Grows, and equity goes down | Goes down as she pays |
| When it's repaid | When the last borrower sells, moves out permanently or passes away | On the schedule in the loan agreement |
| If the balance tops the home's value | Non-recourse, so no one owes the difference | The full balance is owed from the estate, although heirs aren't personally liable for it |
Comparison reflects FHA HECM rules and typical HELOC terms. Individual HELOC agreements vary, and every figure for a specific home comes from the actual loan estimate.
If she's comfortable with a monthly payment and needs a modest amount for a defined purpose, a HELOC or home equity loan is usually cheaper and simpler, and my HELOC guide explains how those work here in Michigan. If she still has years of steady income ahead and mainly wants a lower payment, a regular refinance may be the better conversation. A HECM earns its costs when she plans to stay a long time, and removing the payment or having a line that grows matters more to her than preserving every dollar of equity.
These are the situations where I'll tell you not to do it, and I'd rather you hear them here than after closing.
The upfront costs need time to make sense. If a move is likely in the next few years, there's usually a cheaper way to bridge that time.
If leaving the home free and clear is the single most important goal and there are other ways to get by, a HECM works against that goal.
The existing balance comes out first. If there isn't enough equity underneath it, the loan doesn't work, and that's the most common reason I advise against it.
Maintenance is a requirement of the loan. If the home needs more upkeep than she can manage or afford, a HECM doesn't fix that, and selling might.
A HECM can take away the mortgage payment, but not the tax bill. If those costs are the real pressure, that has to be the first conversation.
If a salesperson, a contractor or someone offering to invest the proceeds is steering her toward a reverse mortgage, slow down. The decision should be hers, made with her family and the counselor, on her timeline.
Many of the people who call me aren't the borrower. They're the son or daughter doing the research, trying to figure out whether this is legitimate and whether it will cost the family the house. That's a reasonable call to make, and you don't need your parent on the line for the first conversation.
Here's how I'd suggest approaching it. Start with the house's real numbers: what's owed, what the taxes and insurance run each year, and how long your parent wants to stay. Then look honestly at the alternatives, including a HELOC, a refinance, downsizing with or without HECM for Purchase, or simply selling. Bring your questions to the counseling session, and have the inheritance conversation out loud, because a reverse mortgage changes what's left at the end, and it's far better for everyone to hear that before closing than after.
When your parent is ready to talk it through, I'll go through it with both of you, including the times when the honest answer is that this isn't the right move.
One conversation, with you, your parent or both of you. I'll tell you plainly whether a reverse mortgage makes sense for the situation, what it would cost next to the alternatives, and what happens to the house afterward, and if it isn't the right move, I'll tell you that too and point you toward what is.
We'll figure it out.
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Sources: 24 CFR Part 206 (§§206.3, 206.19, 206.25, 206.27, 206.33, 206.41, 206.44, 206.55, 206.125, 206.205, 206.209); HUD Handbook 4000.1, Home Equity Conversion Mortgage sections; HUD Mortgagee Letters 2021-11, 2024-06 and 2025-22 (2026 maximum claim amount); CFPB consumer guidance on reverse mortgages; 12 CFR 1026.40; IRS Publication 936; SSA POMS SI 01120.220; MCL 211.27a. Individual lenders may apply requirements stricter than HUD minimums.
About Home Equity Conversion Mortgages. A HECM is a loan insured by the Federal Housing Administration. This page is not from HUD or FHA and has not been reviewed or approved by HUD, FHA, or any government agency, and the product described is not sponsored or endorsed by any government agency. Borrowers must be 62 or older, must continue to pay property taxes, homeowners insurance and any applicable HOA dues, must maintain the property, and must occupy it as their primary residence. Failure to meet these obligations may result in the loan becoming due and payable. No monthly principal and interest payment is required while the borrower meets the loan terms; borrowers may make voluntary payments without penalty. The loan balance grows over time and home equity decreases. Completion of a counseling session with a HUD-approved counselor is required before application. HECM loan advances are not treated as taxable income under IRS Publication 936 and are not counted as SSI income in the month received, although funds kept past that month may count as a resource; nothing on this page is tax, legal, or benefits advice, so consult a qualified professional about your situation. Amounts available depend on the age of the youngest borrower or eligible non-borrowing spouse, expected interest rates, and appraised value. HECM for Purchase requires a cash investment from the borrower. McKenney Home Lending, LLC is a licensed mortgage broker and brokers loans to wholesale lending partners; it is not a lender.
