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Does My Home Qualify for a Reverse Mortgage?

Homes That Could Qualify

Reverse mortgages are popular loans that many seniors age 62 and older are using to help access a portion of their home equity. With this loan, borrowers remain in their homes and do not have a monthly mortgage payment, as long as they comply with their loan terms, including paying their home insurance, taxes, and for ongoing maintenance. Before applying for a reverse mortgage make sure you learn as much as you can about the loan—including what home types may be leveraged with this viable retirement tool.

Single Family Homes

The most common type of home that qualifies for a reverse mortgage is a single-family home. As long as you occupy the home as your primary residence, your single family home could qualify.

Multi-Family Homes

Multi-family homes that contain up to 4 units, such as duplexes, triplexes, and quadruplexes, could qualify for reverse mortgage loans as long as one of the units is the main residence.

Condominiums

Although there are some condominiums that may not qualify for a reverse mortgage, the majority of them could qualify. Those that could qualify are confirmed on an approved list by the Federal Housing Administration (FHA), which can be found here: https://entp.hud.gov/idapp/html/condlook.cfm?qls=WPO_10815lib.promote001

If you find your property on this approved list, then it could qualify as a reverse mortgage condo.

Manufactured Homes

Although many mobile homes are not eligible, manufactured homes could qualify as long as they are approved by the U.S. Department of Housing and Urban Development (HUD) and fulfill requirements set by the FHA. According to HUD, the following must be true in order to qualify:

  • Have a floor area of not less than 400 square feet
  • Be constructed after June 15, 1976, in conformance with the Federal manufactured home construction and safety standards, as evidenced by an affixed certification label in accordance with 24 CFR Section 3280.8; (manufactured homes produced prior to that date are ineligible for insured financing)
  • Be classified as real estate
  • The mortgage must cover both the manufactured unit and its site and shall have a term of not more than 30 years from the date amortization begins
  • Be built and remain on a permanent chassis
  • Be designed to be used as a dwelling with a permanent foundation built to FHA criteria
  • The finished grade elevation beneath the manufactured home or, if a basement is used, the grade beneath the basement shall be at or above the 100-year return frequency flood elevation
  • The home must not have been installed or occupied previously at another site or location

Farms on Agricultural Land

Farms could also qualify depending upon the acreage of land and the value of the home. It is possible for the actual house on a farm to be valued at, as an example, one-fourth of what the entire farm is worth. Therefore, a reverse mortgage would not be calculated using the value of the entire farm property, but rather the value of the house that sits on it, regardless of the rest of the property. In addition, if the property is income-producing, it loses its eligibility to qualify for a reverse mortgage.

Homes That Do Not Qualify

Although many types of homes could qualify for a reverse mortgage, there are a few types that do not. Here are a few homes that reverse mortgages do not cover.

Second Homes and Vacation Homes

Many potential borrowers wonder if it is possible to get a reverse mortgage on second homes or vacation homes. Unfortunately, the answer is no. Reverse mortgages were designed with the intent to help senior homeowners age in their principal residence. Thus, second homes and vacation homes do not qualify, as neither property is the borrower’s primary residence.

Mobile Homes

Although some manufactured homes could qualify, mobile homes do not. Homes covered by reverse mortgages must be considered permanent property attached to land.

Co-ops

Cooperatives are apartment-type dwellings in big cities like New York City, where residents own shares of the property rather than the property itself. Co-ops are usually owned by a corporation and run by a board. However, they do not qualify under reverse mortgages guidelines. According to the FHA, the co-op structure does not meet the requirement of the loan because it is not secured by real property, since it would be secured by shares instead.

Multi-Family Homes of More Than 4 units

Multi-family homes with more than four units do not qualify because they are considered commercial property and not residential property. Only residential properties are considered for reverse mortgages.

If you are still unsure about whether or not your home could qualify, speak with a reverse mortgage professional at 1-888-998-3147 to confirm. Experts at American Advisors Group can answer your reverse mortgage questions and provide details about the eligible home types and borrower qualification. If you and your home are eligible, a reverse mortgage loan may provide you a comfortable retirement—one you deserve to enjoy in the beautiful house that you call home.

Sources:

“Acceptable Properties for a Reverse Mortgage.”  ReverseMortgageConsultant.com.  Reverse Mortgage Consultant.  ND.  Web.  16 November 2015.  http://www.reversemortgageconsultant.com/reverse_mortgage_details/acceptable_properties.html

Assad, Anna.  “What Types of Properties Are Eligible for a Reverse Mortgage?”  HomeGuides.com.  Demand Media.  ND.  Web.  16 November 2015.  http://homeguides.sfgate.com/types-properties-eligible-reverse-mortgage-2297.html

“Financing Manufactured (Mobile) Homes.”  HUD.gov.  U.S. Department of Housing and Urban Development.  ND.  Web.  16 November 2015.  http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/title/repair

“General Program Information.”  HUD.gov.  U.S. Department of Housing and Urban Development.  ND.  Web.  16 November 2015.  https://www.hud.gov/hudprograms/hecm

“How Can I Determine if a Manufactured Home is Eligible for FHA financing?”  HUD.gov.  U.S. Department of Housing and Urban Development.  ND.  Web.  16 November 2015.  http://portalapps.hud.gov/FHAFAQ/controllerServlet?method=showPopup&faqId=1-6KT-1783

“HUD Reverse Mortgages for Co-Ops Unlikely.”  NYTimes.com.  The New York Times.  28 August 2014.  Web.  16 November 2015.      http://www.nytimes.com/2014/08/31/realestate/hud-reverse-mortgages-for-co-ops-unlikely.html?_r=2

“Mortgagee Letter 2009-16.”  HUD.gov.  U.S. Department of Housing and Urban Development.  21 May 2009.  Web.  16 November 2015.  http://portal.hud.gov/hudportal/documents/huddoc?id=09-16ml.pdf

Provencio, Jennifer.  “Fresno Question: Can I Get a Reverse Mortgage on My Mobile Home?”  ActiveRain.com.  NP.  15 May 2015.  Web.  16 November 2015.  http://activerain.com/blogsview/4666307/fresno-question-can-i-get-a-reverse-mortgage-on-my-mobile-home-

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These materials are not from HUD or FHA and were not approved by HUD or a government agency.

©2024 American Advisors Group/AAG are divisions of Finance of America Reverse LLC which is licensed nationwide* | Equal Housing Opportunity | NMLS ID # 2285 (www.nmlsconsumeraccess.org) | 8023 East 63rd Place, Suite 700 | Tulsa, OK 74133 | AZ Mortgage Banker License #0921300 | Licensed by the Department of Financial Protection and Innovation under the California Residential Mortgage Lending Act | Georgia Residential Mortgage Licensee #23647 | Kansas Licensed Mortgage Company | Massachusetts Lender/Broker License MC2285: Finance of America Reverse LLC | Licensed by the N.J. Department of Banking and Insurance | Licensed Mortgage Banker — NYS Banking Department where Finance of America Reverse is known as FAReverse LLC in lieu of true name Finance of America Reverse LLC | Rhode Island Licensed Lender | Not all products and options are available in all states | Terms subject to change without notice | For licensing information go to: www.nmlsconsumeraccess.org

*Finance of America Reverse LLC does not do business as American Advisors Group/AAG in New York.

FAReverse LLC i/l/t/n Finance of America Reverse LLC is Licensed Mortgage Banker in the State of New York, but this site is not authorized by the New York State Department of Financial Services. No mortgage solicitation activity or loan applications for properties located in the State of New York can be facilitated through this site.

For Reverse Loans: When the loan is due and payable, some or all of the equity in the property that is the subject of the reverse mortgage no longer belongs to borrowers, who may need to sell the home or otherwise repay the loan with interest from other proceeds. The lender may charge an origination fee, mortgage insurance premium, closing costs and servicing fees (added to the balance of the loan). The balance of the loan grows over time and the lender charges interest on the balance. Borrowers are responsible for paying property taxes, homeowner’s insurance, maintenance, and related taxes (which may be substantial). We do not establish an escrow account for disbursements of these payments. A set-aside account can be set up to pay taxes and insurance and may be required in some cases. Borrowers must occupy home as their primary residence and pay for ongoing maintenance; otherwise the loan becomes due and payable. The loan also becomes due and payable (and the property may be subject to a tax lien, other encumbrance, or foreclosure) when the last borrower, or eligible non-borrowing surviving spouse, dies, sells the home, permanently moves out, defaults on taxes, insurance payments, or maintenance, or does not otherwise comply with the loan terms. Interest is not tax-deductible until the loan is partially or fully repaid.

STATE OF ILLINOIS COMMUNITY REINVESTMENT NOTICE The Department of Financial and Professional Regulation (Department) evaluates our performance in meeting the financial services needs of this community, including the needs of low-income to moderate-income households. The Department takes this evaluation into account when deciding on certain applications submitted by us for approval by the Department. Your involvement is encouraged. You may obtain a copy of our evaluation. You may also submit signed, written comments about our performance in meeting community financial services needs to the Department. V2024.02.20

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