Reverse Mortgages, Explained
How homeowners 55+ can turn home equity into tax-free income, without selling or making payments.
A reverse mortgage lets homeowners 55 and older borrow against the equity in their home, without having to sell it or make regular payments. Instead of you paying the lender, the lender pays you — either as a lump sum, in planned installments, or a mix of both.
How it works
You can typically access up to 55% of your home's appraised value, based on your age, your spouse's age, and your property's location and type. No regular payments are required as long as you or your spouse continues to live in the home — the loan, plus accumulated interest, is repaid when the home is sold or you both move out.
What you keep
- Ownership and title to your home stay in your name
- The money you receive is tax-free and doesn't affect Old Age Security or GIS benefits
- You choose how to use the funds
What's required of you
- Pay property taxes, insurance, and any condo fees on time
- Keep the property in reasonably good condition
- Pay off any existing mortgage or line of credit with the reverse mortgage proceeds
The trade-off
Because interest accumulates over time rather than being paid down, a reverse mortgage typically costs more over the long run than a conventional mortgage or downsizing. It's worth comparing against other options — like a HELOC or selling and renting — before deciding it's the right fit.