Question 1

What is a reverse mortgage?

Accepted Answer

A reverse mortgage is a loan available to homeowners 62 or older that allows you to convert part of your home equity into tax-free cash. Unlike a traditional mortgage, you receive payments instead of making them — and you never have to repay the loan as long as you live in your home as your primary residence.

Question 2

How does a reverse mortgage work in California?

Accepted Answer

You apply with a HUD-approved lender, your home is appraised, and you complete a required HUD counseling session. The loan amount is based on your age, home value, and current interest rates. You can receive funds as a lump sum, monthly payments, or a line of credit. The loan is repaid when you sell, move out permanently, or pass away.

Question 3

What is a HECM reverse mortgage?

Accepted Answer

HECM stands for Home Equity Conversion Mortgage — the most common type of reverse mortgage, insured by the Federal Housing Administration (FHA). Because it's government-backed, it comes with important consumer protections including non-recourse protection (you never owe more than the home is worth) and FHA insurance that guarantees your payments even if the lender goes out of business.

Question 4

What is a jumbo reverse mortgage?

Accepted Answer

A jumbo (or proprietary) reverse mortgage is a private loan designed for high-value homes — typically those worth over $1 million. Unlike HECM loans, which are capped at the HUD lending limit ($1,149,825 in 2024), jumbo reverse mortgages can provide access to $4 million or more in equity. They are especially popular with California homeowners in high-value markets like Los Angeles, San Francisco, and San Diego.

Question 5

What are my payout options?

Accepted Answer

You can receive your reverse mortgage funds in several ways: (1) Lump sum — receive all available funds at closing; (2) Monthly payments — a fixed amount each month for a set term or for life; (3) Line of credit — access funds as needed, with the unused portion growing over time; or (4) A combination of the above. Your Golden State specialist can help you choose the option that best fits your retirement goals.

Question 6

Who qualifies for a reverse mortgage in California?

Accepted Answer

To qualify, you must: (1) Be at least 62 years old — all borrowers on the title must meet this requirement; (2) Own your home as your primary residence; (3) Have sufficient equity — typically 50% or more; (4) Complete a HUD-approved counseling session; and (5) Be current on property taxes, homeowner's insurance, and HOA fees (or able to pay them going forward). There is no minimum income or credit score requirement for most HECM loans.

Question 7

What types of homes qualify?

Accepted Answer

Eligible properties include single-family homes, FHA-approved condominiums, townhomes, and manufactured homes that meet FHA requirements. The home must be your primary residence — vacation homes and investment properties do not qualify. Multi-unit properties (up to 4 units) may qualify if you live in one of the units.

Question 8

Do I need good credit to get a reverse mortgage?

Accepted Answer

There is no minimum credit score requirement for most HECM reverse mortgages. However, lenders will review your credit history to ensure you can meet ongoing obligations like property taxes and homeowner's insurance. If you have a history of late payments on these items, a "Life Expectancy Set-Aside" (LESA) may be required — a portion of your loan funds set aside to cover these costs.

Question 9

Can I get a reverse mortgage if I still have a mortgage?

Accepted Answer

Yes. In fact, one of the most common uses of a reverse mortgage is to pay off an existing mortgage. The reverse mortgage proceeds first pay off any outstanding mortgage balance, and you receive the remaining equity. This eliminates your monthly mortgage payment entirely — which is often the single largest financial benefit for California homeowners.

Question 10

Can both spouses be on a reverse mortgage?

Accepted Answer

Yes, and we strongly recommend it. When both spouses are listed as borrowers, both must be 62 or older. Both borrowers are protected — the loan does not become due until the last surviving borrower permanently leaves the home. If one spouse is under 62, they may be listed as a "non-borrowing spouse" with certain protections, but the loan terms will be based on the younger spouse's age.

Question 11

How much can I borrow in California?

Accepted Answer

The amount depends on three factors: your age (older borrowers qualify for more), your home's appraised value (up to the HUD lending limit of $1,149,825 for HECM loans), and current interest rates. As a general guide, borrowers in their early 60s can access roughly 40–50% of their home's value, while borrowers in their 80s may access 65–75%. Use our free calculator on the homepage for a personalized estimate.

Question 12

What are the costs of a reverse mortgage?

Accepted Answer

Costs include: (1) Origination fee — up to $6,000 for HECM loans; (2) FHA mortgage insurance premium (MIP) — 2% upfront plus 0.5% annually for HECM loans; (3) Closing costs — appraisal, title, recording fees, typically $2,000–$5,000; and (4) Ongoing interest on the loan balance. Most costs can be financed into the loan with no out-of-pocket expense at closing. Jumbo reverse mortgages have no FHA MIP, which can reduce costs significantly.

Question 13

Are reverse mortgage proceeds taxable?

Accepted Answer

No. Reverse mortgage proceeds are considered loan advances, not income, so they are not subject to federal or California state income tax. They also generally do not affect Social Security or Medicare benefits. However, they may affect Medicaid (Medi-Cal) eligibility if funds remain in your bank account at the end of the month — consult a financial advisor for your specific situation.

Question 14

Does the loan balance grow over time?

Accepted Answer

Yes. Because you are not making monthly payments, interest accrues on the outstanding loan balance over time. The balance grows each month. However, the non-recourse protection means you (or your heirs) will never owe more than the home is worth at the time of sale — the FHA insurance covers any shortfall.

Question 15

What happens to my home equity?

Accepted Answer

Your equity decreases over time as the loan balance grows. However, if your home appreciates in value (as California homes historically have), you may still have significant equity remaining when the loan is eventually repaid. Any equity remaining after the loan is repaid belongs to you or your heirs.

Question 16

Do I still own my home with a reverse mortgage?

Accepted Answer

Yes, absolutely. You retain full ownership and title to your home throughout the life of the loan. The lender simply places a lien on the property, just like a traditional mortgage. You can sell the home at any time, make improvements, leave it to your heirs, or do anything else a homeowner can do.

Question 17

What happens when I move or pass away?

Accepted Answer

When the last borrower permanently leaves the home, the loan becomes due and payable. Your heirs have options: (1) Sell the home and repay the loan, keeping any remaining equity; (2) Refinance into a traditional mortgage to keep the home; or (3) Walk away if the loan balance exceeds the home's value — the FHA insurance covers the difference, and your heirs owe nothing beyond the home itself.

Question 18

Will my heirs inherit debt?

Accepted Answer

No. A reverse mortgage is a non-recourse loan. Your heirs will never owe more than the home is worth at the time of sale. If the home sells for less than the loan balance, the FHA insurance covers the shortfall — your heirs have no personal liability. If the home sells for more than the loan balance, your heirs keep the difference.

Question 19

Can I leave my home to my children?

Accepted Answer

Yes. Your heirs can inherit the home by refinancing the reverse mortgage into a traditional mortgage within 12 months of your passing. They would need to qualify for the new loan and pay off the reverse mortgage balance. If the home has appreciated significantly — as many California homes have — there may be substantial equity remaining for your heirs even after repaying the loan.

Question 20

What are my ongoing responsibilities as a borrower?

Accepted Answer

You must continue to: (1) Pay property taxes on time; (2) Maintain homeowner's insurance; (3) Keep the home in good repair; and (4) Live in the home as your primary residence (you can be away for up to 12 consecutive months for medical reasons). Failure to meet these obligations can trigger the loan to become due and payable.

Question 21

How long does the reverse mortgage process take in California?

Accepted Answer

The typical timeline in California is 30–45 days from application to funding. This includes the required HUD-approved counseling session (usually 60–90 minutes), home appraisal (typically scheduled within 1–2 weeks), underwriting review, and closing. Our team works to streamline every step so you receive your funds as quickly as possible.

Question 22

What is the HUD counseling requirement?

Accepted Answer

Federal law requires all HECM reverse mortgage applicants to complete a counseling session with an independent HUD-approved housing counselor before applying. The session typically lasts 60–90 minutes and covers how reverse mortgages work, your financial obligations, alternatives to consider, and your rights as a borrower. Counseling can be done by phone or in person, and there is a small fee (typically $125–$200) that can be waived if you cannot afford it.

Question 23

Can I cancel a reverse mortgage after closing?

Accepted Answer

Yes. Federal law gives you a 3-business-day right of rescission after closing. During this period, you can cancel the loan for any reason with no penalty. After the rescission period ends, the loan funds are disbursed.

Question 24

Can I refinance a reverse mortgage?

Accepted Answer

Yes. You can refinance a reverse mortgage if your home has appreciated significantly, interest rates have changed favorably, or you want to add a spouse to the loan. Refinancing involves a new appraisal and closing costs, so it makes sense only when the financial benefit outweighs the costs. Your Golden State specialist can help you evaluate whether refinancing makes sense for your situation.

California Reverse Mortgage Questions — Answered

Basics

Eligibility

Costs & Finances

Ownership & Heirs

Process & Timeline

Still Have Questions?