Reverse Mortgage
Direct definition
A loan for older homeowners that converts home equity into cash without monthly payments.
Written by the Vabasso Mortgage Editorial Team · Reviewed against agency and federal sources · Read our editorial policy for how we research and review mortgage content
Plain-English explanation
The most common reverse mortgage is the FHA-insured HECM. Interest accrues and the loan is repaid when the borrower moves, sells, or passes away.
Why it matters
It can provide retirement income but reduces heirs' equity and has specific eligibility rules.
Where you may see it
- Loan disclosures
- HUD counseling certificate
- Closing Disclosure
A real-world example
A 72-year-old with a paid-off home draws a $200,000 line via a HECM to fund healthcare needs.
Educational and illustrative only
A common misunderstanding
A reverse mortgage doesn't give away home ownership to the lender — the homeowner retains title, though the loan balance grows over time and becomes due under certain conditions.
Ask Vabasso AI
This glossary provides general educational information. Mortgage terminology, qualification methods, forms, timelines, fees, program rules, and legal meanings may vary by lender, investor, loan program, property, occupancy, state, and transaction. Definitions do not represent loan approval, legal advice, tax advice, or a commitment to lend.
- Author
- Vabasso Mortgage Editorial Team
- Reviewed by
- Vabasso Mortgage Licensed Advisory Team
- Last reviewed
- July 30, 2026