What Is a HECM?
HECM stands for Home Equity Conversion Mortgage. It is the reverse mortgage insured by the Federal Housing Administration, and it is what almost everyone means when they say "reverse mortgage." It requires the youngest borrower to be 62, the home to be your primary residence, and it counts your home value only up to $1,249,125 in 2026. Roughly nineteen of every twenty reverse mortgages written in the United States are HECMs. The rest are proprietary jumbo programs, which have no federal cap and can start at 55.
See what your home could pay you. About a minute, and the number appears before we ask who you are.
What the Letters Mean
Home Equity Conversion Mortgage. Congress created the program in 1988 and FHA has insured it ever since.
"HECM," "FHA reverse mortgage," "home equity conversion mortgage" and, nine times in ten, plain "reverse mortgage" all refer to this one product. Lenders say HECM. Borrowers rarely do.
What FHA Insurance Actually Buys
Two protections, and they are the reason the program exists.
Non-recourse. You can never owe more than the home sells for. If the balance outgrows the value, FHA covers the difference. Your estate is not pursued.
Continuation of payments. If you elected monthly payments and your lender fails, FHA keeps paying. The insurance premiums on your statement are what fund both guarantees.
Who Qualifies
- Age 62 or older, measured by the youngest borrower on title.
- The home is your primary residence. Not a rental, not a second home.
- Substantial equity. There is no published percentage. In practice most approved borrowers hold at least half.
- An eligible property type. Single-family, two to four units with you in one, FHA-approved condominiums, and most manufactured homes that meet FHA standards. Stock cooperatives are not eligible.
- HUD counseling completed before the application can proceed. What that involves.
- A passed financial assessment, meaning verified ability to carry taxes and insurance.
How Much a HECM Pays
Three inputs, one formula. Your age, the expected interest rate, and your home value up to the $1,249,125 limit.
Older borrower means more. Lower expected rate means more. Higher value means more, until the cap, where it stops mattering entirely.
That last point catches Californians constantly. A 72-year-old with a $1.3 million home and a 72-year-old with a $4 million home receive the same HECM offer. The second homeowner has millions in equity the formula will not look at. That is when jumbo becomes the better product.
The Four Ways to Take the Money
- Line of credit. Draw as needed. The unused portion grows every month at the loan rate, which makes an untouched line worth more later than it is today.
- Tenure. Equal monthly payments for as long as you live in the home.
- Term. Larger monthly payments over a fixed number of years.
- Lump sum. Fixed rate, taken at closing. The only option without a growing line.
Combinations are allowed and common. A first-year draw limit caps most borrowers near 60 percent of the principal limit at closing.
HECM for Purchase
A variant that buys a different home rather than borrowing against the current one. You bring roughly 40 to 55 percent of the purchase price, the HECM funds the rest, and there is no monthly mortgage payment on the new house.
It is the right tool for downsizing into a single-story home without draining the proceeds of the old one. Full detail here.
