Wondering about the reverse mortgage age requirement? Stay Tuned! The answer to the reverse mortgage age requirement is both simple, yet complex depending on the particulars in your household. First, we’ll answer that question in the simplest form. Then, we’ll dive into the complexities and things to consider in terms of the age requirement for reverse mortgages.
As of January 2022, there are two basic types of reverse mortgages. First, there’s the FHA Reverse Mortgage. The second type of reverse loan is a proprietary or jumbo reverse mortgage. Each of these have different minimum age requirements. Further, if you’re married or own the home jointly with someone else, you’ll want to understand the complexities pertaining to the fact that each of you are probably a different age to some extent.
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Reverse Mortgage Age Requirement for the FHA Insured Program
One of the key differences between a regular mortgage and a reverse mortgage is that there is an age requirement with a reverse mortgage. Technically, both have age requirements, but they are much different. For a regular loan, you just have to be of the legal age to enter into a contract at age 18 or more. For the FHA reverse mortgage you have to be aged 62 or older to qualify.
In terms of the Minimum Age for Reverse Mortgage, What if I’m 62 or Older and My Spouse is Younger than 62?
This question comes up often. Historically (until around 2015) , if you were married and one spouse was aged 62 plus and the other was not, it COULD have presented a problem. Especially if you didn’t know the consequences or if the loan officer didn’t properly explain them to you. In a situation where a couple is married and one spouse is aged 62 plus and the other is younger than 62, the younger spouse would be what’s called a “non-borrowing spouse“.
Prior to about 2015 if a couple elected to do a reverse mortgage in this situation, it meant two things:
- It meant that the loan or percentage of the appraisal that you borrow would be based on the age of the borrower (the older one that is 62+).
- Also, if you did a reverse mortgage under these circumstances, it meant that ONLY the borrower could live in the home forever (until death) without making a monthly payment. If the younger spouse (aka non-borrowing spouse) passed away first, there really isn’t a problem. However, if the older spouse (aka borrower) passes away first, well, then there could be a problem and unfortunately some people suffered. In a case like that, it meant that only the borrower had the right to live in the home without making a payment. So, what did that mean for the non-borrowing spouse? It meant that the loan became due. They could still inherit the house, but the loan became due because they were not on the loan since they were not old enough at the time of inception. They’d either have to refinance the loan into their name with a regular loan or with a reverse mortgage. What if they don’t qualify for a refi.? What if, because they were younger and get to borrow less (or if home values went down), they don’t qualify for a reverse loan? Problematic, right? They might end up having no choice but to sell the home. If there is equity, it may not be a big problem. If there isn’t equity, this could create a huge problem for them. Plus, what if they ACTUALLY WANT to live in the home for the rest of their life?
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The good news is, they fixed this problem in about 2015. Whenever you do a reverse mortgage for a married couple, the amount you can borrow is based on the age of the youngest spouse. Prior to HUD fixing this problem, anyone that was younger than age 62 was just out of luck. Now, the percentage you can borrow is based on the age of the spouse that is younger than the older spouse. It does mean access to less reverse mortgage funds, BUT it also means that the younger spouse (even if not 62+) can also live in the home without making monthly loan payments for the rest of their life. This WAS truly the biggest reverse mortgage pitfall. LifeSource Mortgage is glad that problem got fixed!
What is the Reverse Mortgage Age Requirement for Proprietary or Jumbo Reverse Mortgages?
In terms of this question, these programs have evolved quite a bit in the last few years. All the way up until 2018 or so, the jumbo reverse mortgage age requirement was the same at the FHA reverse loan. Hence, Reverse Mortgage Minimum Age Requirement used to be age 62.
In 2018 they changed the proprietary reverse mortgage age requirement to age 60. At the time, only one lender / investor offered that program. Eventually, a few more lenders and investors followed suit.
Fast forward to 2021, one innovative lender / investor lowered the jumbo reverse mortgage age requirement to age 58. Then later in 2021 they lowered it to age 55. Currently (as of May, 2022), there are four lenders / investors that offer reverse mortgages beginning at age 55.
Reverse Mortgage Brokers that are active in the space can align themselves with these lenders just like we do at LifeSource Mortgage. In fact, we’re connected to all of the best lenders that have a minimum reverse mortgage age requirement of just 55. Keep in mind that this program is not available to all states within the United States of America.
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For Married Couples, Do Both Have to Be Aged 55 or Older
The simple answer is yes………and no. Some lenders won’t allow you to do it and NOT include a spouse that is younger than age 55. Other lenders will allow you to do it, but you just need to understand the potential consequences.
How does it work if I do a the proprietary reverse mortgage and my spouse is younger than 55? Basically, if you do it under these circumstances, there can be negative ramifications for the younger spouse. The younger spouse does not reserve the right to live in the home for life without making a mortgage payment. Only the actual borrower that was 55 plus at the time of the loan inception. Hence, if one spouse is old enough, and the other is not, a reverse mortgage might not be the best option YET.
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Beyond the Minimum Age for Reverse Mortgage |Reverse Mortgage Basics
In the event you initially checked into the “reverse mortgage age requirement“, but were not fully aware of the reverse mortgage basics we’ll clue you in now.
A reverse mortgage is a very safe FHA insured home loan. Reverse Mortgages allow you to access a portion of your equity and turn it into usable cash or funds. The best part about a reverse mortgage for many people is that there is no monthly mortgage payment for as long as you live or for as long as you live in your home.
You’ll still own the home, so naturally, you’ll still need to pay your property taxes and maintain homeowner’s insurance.
Give us a call and find out if a reverse mortgage is right for you.
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Reverse Mortgage Pros and Cons
Pros:
- There is no monthly payment required for as long as you live (or for how ever long you live in your home as your primary residence).
- While there are no required monthly payments, you can ELECT to make payments. You can pay as often or as infrequently you as you desire. This loan is all about financial freedom for homeowners aged either 55 plus or 62 plus depending on the program.
- You still retain ownership of your home.
- Since you still own your house, you can still leave the home to your heirs.
- You have many choices in terms of how you receive your loan proceeds. For example, you can get monthly payments for life, higher monthly payments for a set term, a lump sum, line of credit, or a combination all the above.
- Since the funds you receive are not income (they are loan proceeds), the money is tax free.
- You have the ability to choose how you use your money. The bank does not dictate how you use the funds from a reverse mortgage. The only exception is if you don’t pass the financial assessment. In that case, some of the money needs to be set aside for a tax and insurance escrow account.
- You’ll be able to better manage expenses during your retirement. Often times, retirees experience a reduction in income. The ability to eliminate your mortgage payment and / or have access to extra funds during retirement can be largely beneficial.
- You can age in place and stay in your home which you’ll still own.
- This doesn’t impact your social security income.
Cons:
- Your loan balance gets larger if you don’t make a payment.
- Since your loan balance grows, your kids get a smaller inheritance than if you didn’t have a home loan.
- It can potentially impact your ability to get food stamps, etc. Learn about the rules for food stamps to potentially use a reverse mortgage in such a way that you don’t lose benefits.
If you meet the minimum reverse mortgage age requirement, perhaps a reverse mortgage can help improve the quality of your retirement years.
