Reverse mortgages are gaining popularity among cash-strapped retirees looking to supplement Social Security and retirement savings without giving up their homes.
How Reverse Mortgages Work
Homeowners aged 62+ can borrow against their home equity and receive funds as a lump sum, monthly payments, or line of credit. No monthly mortgage payments are required — the loan is repaid when the homeowner sells, moves, or passes away.
2026 HECM Limits
- Maximum claim amount: $1,149,825 (up from $1,089,300)
- Average borrower receives: $165,000
- Interest rates: 6.5-7.5% variable
- Upfront mortgage insurance: 2% of home value
Pros and Cons
The main advantage is staying in your home while accessing equity. The downside is high fees and interest that compound over time, potentially leaving less inheritance for heirs. Financial advisors recommend reverse mortgages as a last resort after exhausting other retirement income sources.
