To be eligible for a HUD reverse mortgage loan, HUD's Federal Housing Administration (FHA) requires that the borrower is a homeowner, 62 years of age or older; own your home outright, or have a low mortgage balance that will be paid off at the closing with proceeds from the reverse loan; and must live in the home. You are further required to receive consumer information from HUD-approved counseling sources prior to obtaining the loan.
Can I apply if I didn't buy my present house with FHA mortgage insurance?
Yes. It doesn't matter if you didn't buy it with an FHA-insured mortgage. Your new HUD reverse mortgage will be a new FHA-insured mortgage loan.
What types of homes are eligible?
Your home must be a single-family dwelling or a two-to-four unit property that you own and occupy. Townhouses, detached homes, units in condominiums and some manufactured homes are eligible. Manufactured/mobile homes must be built on a set foundation and certain other requirements must be met. Condominiums must be FHA-approved.
What's the out-of-pocket cost?
The out-of-pocket cash cost to you is most often limited to an application fee that covers a property appraisal (to see how much your home is worth), and a credit report fee (here at Alliance, we do not require you to pay up front for a credit report fee. We roll that into the closing costs), and a HUD counseling fee (as aforementioned, depending on what county and city you live in, this fee may be waived).
Most of the other costs can be "financed" with the loan. This means that you can use reverse mortgage funds advanced to you at closing to pay the costs due at that time, and later advances to pay any ongoing costs. The advances are added to your loan balance, and become part of what you owe – and pay interest on.