Reverse Mortgages (HECM) in Florida

A Home Equity Conversion Mortgage (HECM) is the most common type of reverse mortgage. It is insured by the Federal Housing Administration (FHA), part of HUD, and is only for homeowners 62 and older (CFPB: What is a reverse mortgage?). Skyline Mortgage, a licensed Florida mortgage broker, helps Florida homeowners compare HECMs from FHA-approved lenders.

Skyline Mortgage is not affiliated with HUD, FHA or any government agency.

How a HECM works

A reverse mortgage is a loan. You keep title to your home, and you don't make monthly principal and interest payments while you live in the home and meet the loan terms. Interest, mortgage insurance and fees are added to the balance each month, so the amount you owe grows over time and your equity shrinks. The loan is usually repaid when the last borrower sells, moves out or dies, often by selling the home.

You can generally take the money as a lump sum, monthly payments, a line of credit or a combination, depending on the loan.

Who may qualify

Under HUD's HECM rules, generally:

• At least one borrower is 62 or older.
• You own the home outright or have substantial equity, and any existing mortgage is paid off with the HECM.
• The home is your principal residence.
• You aren't delinquent on any federal debt.
• You have the financial resources to keep paying property taxes, insurance and HOA dues. The lender completes a financial assessment and may set aside part of the loan for these costs.
• You complete counseling with a HUD-approved HECM counselor before you apply. Find one with HUD's housing counselor search.

Eligible homes include single-family homes, 2–4 unit homes where you live in one unit, FHA-approved condos and manufactured homes that meet FHA rules. FHA sets a maximum claim amount that limits how much home value counts.

Your ongoing obligations

You must keep living in the home as your principal residence, pay property taxes, homeowners insurance and any flood insurance and HOA or condo dues on time, and keep the home in good repair. If you don't, the loan can become due and payable, and you could lose your home to foreclosure.

In Florida, this matters more than usual. Wind and flood insurance premiums can rise, and condo associations can levy special assessments. Plan for those costs before you apply. See our guides to homeowners insurance, flood insurance and Florida property taxes.

Florida condos and HECMs

A condo generally needs to be in an FHA-approved project, or the unit must qualify for FHA single-unit approval. Check HUD's condo lookup. Florida's milestone inspection and reserve study rules can affect the association's finances and approval. Read our Florida condo mortgage guide.

HECM for Purchase

Many people move to Florida in retirement. With HECM for Purchase, homeowners 62 and older can use a HECM to help buy a new principal residence. You pay the difference between the purchase price and closing costs and the HECM amount from your own approved funds, such as sale proceeds or savings, and you must move in within the time FHA allows (CFPB: buying a home with a reverse mortgage).

Spouses and heirs

• Spouses. If your spouse isn't a borrower, for example because they're under 62, HUD rules may let an eligible non-borrowing spouse stay in the home after you die, if certain conditions are met. Ask about this before you apply.
• Heirs. When the loan becomes due, heirs can repay the balance and keep the home, sell it, or turn it over to the lender. If the balance is more than the home's value, heirs can satisfy the loan by selling for at least 95% of the appraised value, and FHA insurance covers the rest. Heirs generally have 30 days after the due and payable notice to act, and the timeline may be extended up to six months to sell or get financing (CFPB: heirs and reverse mortgages; HUD: inheriting a HECM). Talk with your family now.

Costs and protections

HECMs carry an upfront and an annual FHA mortgage insurance premium, plus origination and closing costs. Ask for every cost in writing. With most reverse mortgages, you have three business days after closing to cancel. Be wary of anyone who pressures you, such as a contractor who suggests a reverse mortgage to pay for repairs. VA doesn't offer reverse mortgages.

Is a HECM the right fit?

A HECM can help some homeowners stay in a home they plan to keep, but it uses up equity and isn't right for everyone. Compare it with a HELOC or fixed home equity loan, a cash-out refinance or downsizing. We serve homeowners across Florida from Palm Coast. See our Florida mortgage broker page.

Call (407) 663-4743 or contact us to talk through whether a HECM may fit, before or after your counseling session.