Withdraw equity and turn it into cash
Home Equity Conversion Mortgage Program
Take advantage at age 62 years or older
Can provide financial security and independence
The HECM standard loan requires an Initial Mortgage Insurance Premium of 2% of the FHA maximum claim amount.You may apply for a HECM regardless of whether or not you purchased your home with an FHA-insured mortgage, but must meet the following specifications:
- 62 years of age or older
- Property used as collateral must be the primary residence
- Property being used as collateral must be owned or have a low mortgage balance that can be paid off at closing with proceeds from the reverse loan
- Must be single-family home or a 2-4 unit home with one unit occupied by the borrower (HUD-approved condominiums and manufactured homes that meet FHA requirements are also eligible)
- No delinquencies on any federal debt, suspensions, debarments, or excluded participation from FHA programs
- Completion of HECM counseling
Once the loan has closed, the borrower must adhere to the following:
- Occupy the home as a principal residence
- Make timely payments of their property taxes, Home Owners Association (HOA) fees, ground rents, etc.
- Maintain homeowner’s hazard insurance policy
- Maintain the property in a condition equal to when the loan was closed
The allowable amount of money borrowed varies loan to loan, and can depend on:
- Value of home
- Age of youngest borrower
- Current interest rate
- Disbursements are made in equal monthly payments or in amounts defined by the homeowner
Beginning October 4, 2010, homeowners seeking to obtain a FHA Home Equity Conversion Mortgage (HECM) now have the option of reducing their closing costs by selecting HECM Saver as their initial mortgage insurance premium. The HECM Saver differs from the traditional HECM Standard Program in that eligible borrowers 62 and older will be charged significantly lower upfront fees. However, the lower upfront fees do result in less money being made available to the borrower than is available under HECM Standard.
There are no additional eligibility requirements for HECM Saver; homeowners just need to meet existing HECM program requirements. HECM Saver is available for all HECM transaction types and payment plans. Additional information about HECM Saver can be obtained from a HUD-approved HECM Counselor or FHA-approved lender.
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