finance
reverse mortgage
A loan available to older homeowners, commonly age 62 or older, that lets them convert home equity into cash through a lump sum, monthly payments, or a line of credit, without making monthly mortgage payments. The loan balance grows over time and is usually repaid when the borrower sells, moves out permanently, or dies. Borrowers must still pay taxes and insurance.
- Exam tip
- In a reverse mortgage, the balance increases rather than decreases. The FHA-insured version is called a Home Equity Conversion Mortgage (HECM).
- Example
- A 70-year-old homeowner with a paid-off house takes a reverse mortgage to receive $1,000 a month while continuing to live there.
Related terms & state variants
Sources
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Last verified: 2026-10-23