Casa Academy

Reviewed by Casa Academy and updated July 29, 2026 using the current DBPR checklist and Pearson VUE scheduling guidance.

Reverse Mortgage

A reverse mortgage is a loan for homeowners age 62 or older that converts home equity into periodic payments or a line of credit without requiring monthly principal and interest payments, with the balance typically due when the borrower sells, moves out permanently, or dies.

Exam context

Reverse mortgage pays homeowner from equity; no monthly P&I required. HECM is FHA-insured for 62+. Loan due on sale, move-out, or death. Non-recourse limits balance to home value.

Home Equity Conversion Mortgage (HECM)

Most reverse mortgages are FHA-insured HECMs with mandatory counseling, principal limit factors based on age and interest rates, and non-recourse protection so heirs never owe more than the home value at payoff. Borrowers remain responsible for property taxes, insurance, and maintenance. Failure to pay these obligations can trigger default.

Agent and counselor role

Reverse mortgages reduce equity available to heirs and may affect Medicaid eligibility or estate plans. Licensees should refer seniors to HUD-approved counselors rather than recommending products. Heirs may repay the loan and keep the home or sell to satisfy the lien. Proprietary reverse products exist outside FHA insurance with different terms.

Examples

  • Monthly tenure payments

    A 72-year-old homeowner with significant equity receives $1,200 monthly from a HECM while continuing to live in the home and paying taxes and insurance.

  • Line of credit draw

    A retiree establishes a HECM line of credit and draws $40,000 for medical expenses; the unused portion grows over time per program rules.

Keep studying

Practice reverse mortgage questionsEnroll in pre-licensing

Related terms

Related resources

Sources