Qualification Requirements On HUD FHA Reverse Mortgages


Qualification Requirements On HUD FHA Reverse Mortgages

This BLOG On Qualification Requirements On HUD FHA Reverse Mortgages Was UPDATED On May 22nd, 2018

HUD FHA Reverse Mortgages permits homeowners who are 62 years or older to use the equity in their homes to cash out and supplement their income.

  • The cash out refinance through a reverse mortgage is given to the homeowner
  • They can use it for whatever purpose they want
  • Proceeds can be use it for following purposes:
    • can save it in their bank accounts for added security
    • use to pay off debts
    • do remodeling or construction
    • use it for a vacation
    • purchase a mobile home
    • buy an recreational vehicle
    • purchase new car or pay off outstanding car loans
    • buy a second home or investment real estate
    • gifting it to their children and grandchildren
    • or they can use it for anything they like
  • To qualify for a reverse mortgage, homeowners need to have equity in their homes
  • Homeowners with high loan to value or underwater mortgages will not qualify
  • The older the homeowner is the more cash out they can take out
  • The maximum loan to value on a reverse mortgage is determined by the age of homeowners

What Are HUD FHA Reverse Mortgages?

Homeowners who are 62 years old or older who have equity in their homes can qualify for reverse mortgages.

  • Reverse mortgages enable elderly homeowners who have equity in their homes to convert their equity into cash via a reverse mortgage cash-out refinance 
  • After getting their new reverse mortgage, homeowners do not have to worry about making a monthly housing payment for the rest of their lives
  • Once homeowner passes, the home is transferred to heirs of homeowners
  • Heirs have the option to either pay off the reverse mortgage and keep the home or surrender the home to the reverse mortgage lender

How Much Can I Take Out On HUD FHA Reverse Mortgages?

The amount homeowners can cash out on a reverse mortgage refinance depends on borrowers age.

  • The older borrowers are, the more they can take out
  • All reverse mortgages need to be on a first lien position
  • Homeowners with current first mortgage, then the first mortgage will need to be paid off with the proceeds of the reverse mortgage

Types Of HUD FHA Reverse Mortgages

Homeowners have several options on how to receive proceeds of HUD FHA Reverse Mortgages. They can take out a one time lump sum from a cash out reverse mortgage. They can also opts for a monthly payment plan, line of credit, or a combination of the above options.

Qualification Requirements For HUD FHA Reverse Mortgages

As mentioned above, homeowners need to be at least 62 years old to qualify for a reverse mortgage.

  • No income is required and income is not verified
  • Credit and credit scores are not a factor
  • Homeowners need to live in the home the reverse mortgage is taken out
  • Second homes and/or investment homes do not qualify for reverse mortgages
  • Homes need to be residential homes that is 1 to 4 units, Warrantble FHA approved condominium units, town homes, and possibly manufactured homes
  • Mobile homes and timeshares do not qualify

Home Buyers can also purchase a home with HUD FHA Reverse Mortgages. The amount of down payment depends on how old the home buyer is. Need to be at least 62 years old and meet HUD FHA Reverse Mortgage Guidelines as well as all HUD 4000.1 FHA Handbook Requirements. There are many instances where folks retire and sell their homes and decide to take the proceeds and purchase a new home in a warmer climate state. They take the proceeds of the sale of their home and purchase their homes in warmer climate states such as Florida, Arizona, California, Texas. The substantial down payment on their new home purchase will qualify them for a purchase Reverse Mortgage. They no longer have to worry about making a house payment ever again. The loan balance does go up every month. They do not have to worry about living a long life because FHA insures lenders if the home loan balance is higher than the value of the home.

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