When a reverse mortgage has to be repaid
A reverse mortgage lets an older homeowner draw on home equity without monthly loan payments. Most are Home Equity Conversion Mortgages (HECMs), which are insured by the Federal Housing Administration (FHA). The CFPB says repayment is due when the last surviving borrower (or an eligible non-borrowing spouse) dies, when you sell the home, or when you no longer live there as your main home. It can also be due earlier if you do not keep up property taxes, insurance or maintenance. If you are away in a care facility for more than 12 months in a row, the loan can come due.
This page is about HECMs. Some private ("proprietary") reverse mortgages follow different rules, so ask your lender which kind you have.
If you are selling while you are alive
You list and sell like anyone else, but the reverse mortgage is repaid from the sale money first. If the sale price is more than the balance, you keep the difference. If you owe more than the sale price, the CFPB says the remaining balance is paid by FHA mortgage insurance on a HECM, so the lender cannot come after you or your other assets for the gap.
A few practical steps:
- Tell the servicer you plan to sell. Ask for a payoff statement and the closing instructions. Federal rules exempt reverse mortgages from the 7-business-day payoff deadline; the servicer must send the statement within "a reasonable time." Ask early. (Massachusetts' own rule is in MGL c.183 s.54D; ask your attorney how it applies to your loan.)
- Ask about the appraisal. HUD's rules say the lender orders an appraisal by an FHA roster appraiser within 30 days of a request in connection with a possible sale. If the loan is already due and payable, the lender pays for the appraisal and can be reimbursed from the sale. Otherwise, the requesting party pays.
- Keep paying taxes and insurance. These stay your job until closing. If you stop, the loan can come due early.
- Plan your next home. Sale money goes first to the reverse mortgage. Use the net proceeds calculator to see what is left, and read downsizing your home and aging in place vs selling.
After the borrower dies: options for heirs
When the last surviving borrower dies, the loan becomes due and payable. HUD's Mortgagee Letter 2022-15 says the lender must send the estate, heirs or other party with legal title a due and payable notice within 30 days after it tells HUD about the death. The notice must say the estate or heirs may satisfy the loan, sell the property for at least 95% of its appraised value, or give the lender a deed in lieu of foreclosure.
| Option | What it takes | Notes |
|---|---|---|
| Sell the house | Repay the lesser of the loan balance or 95% of the appraised value | If the house is worth more than the balance, the estate keeps the difference |
| Keep the house | HUD and the CFPB say the loan balance must be paid in full | Usually needs the heir's own financing; ask the servicer whether the 95% rule applies to a purchase by an heir |
| Deed in lieu | Give the title to the lender to avoid foreclosure | Ends the debt but you lose the house |
HUD's 2019 sheet for heirs says any post-death transfer is treated as a sale for the 95% rule, while its own wording on keeping the home says full payment. We could not resolve that difference from the documents we read, so ask the servicer in writing which amount applies to your plan.
The deadlines: what we found and what we could not confirm
HUD's sheet for heirs (September 2019) says the loan must be satisfied within 30 days of the borrower's death, and that the lender may approve 90-day extensions if the estate or heirs show proof they are actively trying to sell or repay. The CFPB says heirs have 30 days after the due and payable notice to buy, sell or turn the home over, with extensions of up to six months possible for a sale or refinance.
These sources do not match word for word, and HUD's rules on notice timing changed in 2022. We could not find a single current HUD page that sets one clear schedule, so treat 30 days as the point to call the servicer, and ask for any extension in writing. Never assume you have more time.
The estate also pays property taxes and insurance until the title transfers (HUD). If a spouse who was not a borrower lives in the house, special rules may let them stay; they must give the lender a Non-Borrowing Spouse Certification within 30 days of the borrower's death, per HUD's sheet. Ask a housing counselor or attorney right away.
Who can sign: probate in Massachusetts
If the borrower owned the house alone, the estate usually has to be opened in probate so that a personal representative can sign the sale papers. Start that early because the lender's clock is already running. See probate in Massachusetts, the executor checklist and what to do with a house after a parent dies. Our inherited house page explains the options.
Counseling and help
A HUD-approved housing counselor can walk you or the heirs through the options for free or at low cost. Find one at HUD's counselor search. The FHA Resource Center can be reached at (800) CALL FHA (225-5342). If you are an heir, call the servicer right away and keep notes on every call.
For a sale, you can compare a traditional listing with a cash offer at the comparison tool. A cash buyer may close faster, which helps when a deadline is close, but price and terms vary, so compare both.